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A Nexus of Energy Consumption, Institutions, Financial Market and Economic Growth

Gulam Rasool Madni, Maria Mehmood

This study examined the impact of energy consumption, institutions and financial market on economic growth of Pakistan for the period of 1985-2014. Vector error correction (VECM) model is applied to analyze the short run and long run association among variables. Estimated results reveal that energy consumption, institutional quality, financial market, labor and capital have positive impact on economic growth while consumer price index and interest rate have negative impact on economic growth of Pakistan. It is suggested that government should increase the investment in energy sector and improve the institutional quality in the country while financial reforms and restructuring of financial sector will promote private lending so unemployment will be reduced.