Linkage of financial development with electricity-growth, nexus of India and Pakistan

Abstract

This paper tries to identify the indirect linkage between intermediary development with energy-growth nexus for India and Pakistan. In this succession the study employ system based GMM approach along with principal component analysis for development of intermediary index. Findings of the study demonstrate the positive and significant impact of economic growth on electricity consumption of both nations. However a miscellaneous trend for urbanization and negative trend for prices with electricity consumption has also been found in this study. On the other hand, the linkage between financial development through growth on electricity consumption is positive and significant for both nations. These findings have important implications for the policy makers. They can use these Findings to ensure long term structural development to control future power constraints, which leads them towards higher level of sustainable development.