Revisiting the growth-carbon dioxide emissions nexus in Pakistan

Abstract

Pakistan is the most polluted country according to the concentration of air pollution criterion and it has experienced a significant rise in economic growth during the recent years. This paper analyzes the nexus of CO₂ emissions and economic growth using quarterly data over the period of 1960Q1–2014Q4. To provide conclusive policy recommendations, this study applied different econometric methodologies such as the quantile causality approach, the linear ARDL (autoregressive distribution lag) model and the quantile ARDL (QARDL) model. The results indicate evidence of causality running from economic growth to CO₂ emissions at medium quantiles at the 5% level and at low and medium quantiles at the 10% significance level. Findings of linear and nonlinear ARDL models also support the transmission of growth to CO₂ emissions in the long and short run. The Wald test for symmetry sustains the nonlinear ARDL model. Useful policy implications can be learned from the empirical findings.

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