Analysis on the nexus of CO2 emissions, energy use, net domestic credit, and GDP in Pakistan: an ARDL bound testing analysis

Greenhouse gas effect is known as the main cause of worldwide warming and environmental change. The present study was planned to examine the causal relationship between carbon dioxide (CO2) emissions, CO(2)emissions from solid fuel consumption (CO2S), energy use (EU), fossil fuel energy consumption (FOF), gross domestic product (GDP), and net domestic credit (NDC). This research work is based on Pakistan's annual data from 1971 to 2014. Autoregressive distributed lag (ARDL) bound testing design was used to measure both long-run and the short-run relationships among all study variables. To inspect the stationarity of the study variables, augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests were also carried out. The outcome of the long-run estimates indicated that CO2S, EU, and GDP all have a significant relationship with CO(2)emissions while both FOF and NDC did not exhibit any significant effect. The value of error correction term (ECT) was - 0.977 which signifies that the deviation of CO(2)emissions from short-run to long-run equilibrium was fitted by 97.7% per year. Johansen co-integration test results display a long-run association between the study variables. Based on the study findings, the government requires to take effective measures for constructive policy-making and identification of environmental threats in Pakistan. Additionally, emission decreasing actions should be settled the fundamental agenda in energy and environmental strategies of Pakistan for the reduction in damages connected with carbon dioxide emissions.