Causality between Environment and Financial Development in case of Pakistan: A Time Series Analysis

Authors

  • Ayesha Amjad COMSATS University Islamabad, Lahore Campus, Pakistan
  • Ayesha Manzoor University of Central Punjab, Lahore Campus, Pakistan
  • Um-I- Kulsoom The Islamia University of Bahawalpur, Pakistan

DOI:

https://doi.org/10.52131/jee.2020.0101.0005

Keywords:

CO2 emissions, Financial Development, Population, Trade, ARDl, Pakistan

Abstract

Climate change is now widely regarded as one of the greatest issues of our era. As a result, it is critical to study the impact of various macroeconomic variables on the environment. The purpose of this research is to look at the link between financial development and environmental (CO2 emissions) in Pakistan from 1980 to 2014. The Auto Regressive Distributed Log (ARDL) technique was employed to track both long-term and short-term association between variables in this investigation. Granger causal testing is used to examine the causal relationship. Study results suggest that there is a unidirectional causality between CO2 and the financial development Index. However, the environment (CO2 emissions) in the long run will depend on the financial development that the financial development index (domestic credit to private sector aggregate market capitalization, and FDI) has in Pakistan. In the second model, the environment (energy consumption) also depends on financial development.

Author Biographies

Ayesha Amjad, COMSATS University Islamabad, Lahore Campus, Pakistan

Department of Management Sciences,

COMSATS University Islamabad, Lahore Campus, Pakistan

Ayesha Manzoor, University of Central Punjab, Lahore Campus, Pakistan

Assistant Professor, Department of Psychology

Um-I- Kulsoom, The Islamia University of Bahawalpur, Pakistan

Department of Economics, 

The Islamia University of Bahawalpur, Pakistan

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Published

2020-06-30

How to Cite

Amjad, A., Manzoor, A. ., & Kulsoom, U.-I.-. (2020). Causality between Environment and Financial Development in case of Pakistan: A Time Series Analysis. IRASD Journal of Energy & Environment, 1(1), 49–60. https://doi.org/10.52131/jee.2020.0101.0005

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Section

Articles