The effect of climate change on economic growth: evidence from Pakistan

Abstract

This study is a contribution to empirics of climate change and economic growth in Pakistan. This study considered annual data from 1980 to 2013. This study intends to use the gross domestic product (GDP) per capita in current US Dollars. The proxy used for investment is gross fixed capital formation (GFCF). The data of GFCF is in a total amount in US Dollars. The TRADE data is in total trade in one year as a percentage of GDP. The data of CO2 is in total carbon dioxide emissions (kt). We performed an autoregressive distributed lag (ARDL) bound testing design to measure the long-run as well as the short-run association of climate change with economic growth. The notable finding suggests that CO2 significantly affects economic growth. In addition, economic growth is also significantly affected by temperature. Such results highlight that CO2 and TEMP adversely affect the economic growth of Pakistan. There is a positive but minimal impact of RAIN on the economic growth of Pakistan. The notable finding suggests that CO2 which was significantly negative in long run has an insignificant effect in a short run of Pakistan. However, the coefficient of CO2is still negative in the short run.