Asymmetric impact of energy consumption and economic growth on ecological footprint: Using asymmetric and nonlinear approach

The main objective of this article is to examine the impacts of energy consumption and economic growth on environmental quality in Pakistan. We use the ecological footprint (environmental quality) as a target variable, the control variables of gross domestic products are a proxy of economic growth, and energy consumption and gross fixed capital formation are proxies of capital from 1971 to 2014. For this purpose, a unit root test with break dates is employed for a stationary check, and a BDS test is used for nonlinearity. The nonlinear autoregressive distributed lag approach is employed to assess the asymmetric co-integration among the variables. These results confirm the asymmetric co-integration among the variables. The asymmetric causality technique is also applied to scrutinize the causal link between the variables. The asymmetric feedback effect is observed between positive shocks to environmental quality and energy consumption, and symmetrically, environmental quality causes energy consumption. By contrast, the neutral effect is observed among environmental quality, economic growth, and capital. Based on these findings, current energy portfolios should be diversified by either enhancing or incorporating renewable energy technologies, and this is indispensable to support the existing successful strides of environmental policies. Thus, policymakers must buttress their commitments to reduce emissions by sustaining and decarbonizing the trajectory of economic growth.