Energy Prices and Its Impact on Household Consumption in Pakistan

The objective of this research paper is to analyze the energy prices and their impact on household consumption in Pakistan. Time series annualyy data for period of 1972-2018 was used in this study. The data was collected from World Development Indicators, Pakistan Economic Survey,2020 and Asian Development Bank. Household energy consumption was dependent variable while independent variables include energy prices, urbanization, per capita income and investment. We applied unit root test to check stationarity among variables and also used ARDL approach and Bound Test to determine long run relationship. Our results reveal that there is a negative relationship between energy prices and household energy consumption in Pakistan. We suggest that Pakistan should use renewable resources to generate electricity and to reduce its growing cost.