Energy Consumption, Institutional Quality and Environment in Pakistan
Abstract
This paper analyzes environmental sustainability in Pakistan from 1990 to 2022, focusing on the impacts of energy consumption, trade openness, institutional quality, and industrialization. Employing Nonlinear Autoregressive Distributed Lag (NARDL) approach, we examine the long-term relationships among these variables. Our empirical results indicate that both positive and negative shocks in energy consumption lead to increased CO2 emissions. Industrialization is also positively correlated with higher CO2 emissions, while trade openness and institutional quality contribute positively to reducing environmental degradation. The findings suggest that to mitigate the adverse effects of energy consumption, the Pakistani government should promote the adoption of renewable energy sources.
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