NEXUS BETWEEN RENEWABLE & NON-RENEWABLE ENERGY CONSUMPTION AND ECONOMIC GROWTH IN PAKISTAN: A REVISIT USING MAXIMUM ENTROPY BOOTSTRAP ANALYSIS

Abstract

This paper investigated the causal directions of disaggregated energy consumption (renewable & non-renewable energy consumption) with economic growth by employing the new state of art technique called as maximum entropy bootstrap method (meboost) for Pakistan during 1975-2021. Since such technique is robust in the sense that unlike the existing methodologies, this approach has no reliance on the conventional assumptions of asymptotic theory enabling meboost to robust inferences with small size. The method is also independent of specification issues, lag length selection, and can be applied even in the presence of any kind of structural gap and non-stationarity of dataset without manipulation of dataset for stationarity. The observed results supported the growth-hypothesis for renewable energy model and concluded conservation hypothesis for non-renewable energy consumption model. In lights of obtained results, it is recommended that Pakistan's government should proactively develop conservation policies for non-renewable energy consumption and implementation policies for renewable energy consumption through different sources including domestic energy resources, hydropower resources and solar energy.