Environmental Kuznets Curve: A Times Series Evidence from Pakistan

In this paper, the Environmental Kuznets Curve (EKC) is used to investigate the connections between CO2 emissions, energy consumption, economic growth, trade openness and urban population in Pakistan over the period of 1971-2010. The Autoregressive distributed lag (ARDL) bounds testing approach to co-integration has been taken for long run relationship, and for the short run dynamics Granger causality considered within the vector error correction model (VECM). The study presents that energy consumption, trade openness and urban population serve as the main factors contributing to CO2 emissions in the long run. The results are in line with hypothesis in long run, and in short run inverted U-shape relation was found between CO2 emissions and the economic growth. Trade openness and urban population Granger are responsible for CO2 emissions. The facts about the existence of an EKC relation can help the policy makers in creating all-inclusive economic and environmental policies for the sustainable economic growth, and preserve clean environment.