Energy, emissions and the economy: Empirical analysis from Pakistan

Abstract

The aim of this paper is to investigate the long run relationships among the Energy, Environment and the Economy (E-E-E). This paper also tests the Environmental Kuznets Curve (EKC) for the case of Pakistan. We find robust long run relationships between energy, environment and economic growth. It is also found that the capital and labour elasticities of income show decreasing returns in the presence of energy and emission variables. We found no evidence of EKC but the nonlinear response of CO2 emissions to economy exist in the cubic trend. This analysis implies that the focus of policy-maker should be to encourage environment friendly energy sources. After an initial stage of economic development we have to take serious measures to tackle the issues of environmental degradation.