From GDP to Green Energy: Asymmetric Impacts of Environmental, Economic, and Energy on Pakistan's Per-Capita Energy Consumption
DOI:
https://doi.org/10.62843/jrsr/2025.4d146Keywords:
Asymmetrical Effects, NARDL, Green Energy, Foreign InvestmentAbstract
Developing economies demonstrate nonlinear responses in energy and environmental studies owing to challenges in development and day-to-day economic demands. This study employs asymmetric short- and long-run relationships among per capita energy consumption, energy intensity, open trade, renewable energy, and foreign investment for Pakistan for the period–1970-2023. Using the NARDL framework, regressors are divided into positive and negative observations to enable differential treatment of positive and negative shocks on the dependent variable, per capita energy consumption. The results indicate that energy intensity demonstrates symmetrical long-run effects with a coefficient of −2.05, reducing per-capita energy consumption and confirming the energy conservation hypothesis. Foreign investment inflows and outflows have asymmetric long-run effects. Renewable energy shows significant positive effects only in the short run, indicating that infrastructure development is in its earliest phase, where energy intensity initially increases before declining in later phases. Open trade shows no statistically significant short- or long-term effects. These findings demonstrate that nonlinear analysis approaches contradict the linear modeling methods currently employed. Policy recommendations are provided to address asymmetrical positive and negative economic responses, improve green energy transitions, and optimize FDI allocation for sustainable development in cleaner technologies.
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