Natural Gas Consumption and Economic Growth in Pakistan

Natural gas is a dominant fuel in Pakistan. It offers the cheapest and a cleaner alternative source of energy. This paper examines the relationship of natural gas consumption and economic growth in Pakistan. We include capital, labor and exports in the model with multivariate framework. The ARDL bounds testing approach to cointegration and innovative accounting approach are employed to investigate the dynamic causality relationships among the variables. We find the existence of long-run relationship among the variables. Natural gas consumption, real capital, labor and real exports are positively affecting the economic growth in Pakistan. Furthermore, we support the natural gas consumption-led-growth hypothesis and suggest that the natural gas conservation policies may retard the rate of economic growth