Economic Freedom Indicator Contribute to Energy Utilization? A Missing Link in Energy Reforms

The objective of the study is to examine the possible linkages between economic freedom indicators and energy utilization in Pakistan, for the time period during 1995-2013. The study used three most promising energy variables i.e. coal, electricity and oil energy consumption, which serves as dependent variables of the study. Further, the study used ten economic freedom indicators which served as explanatory variables of the study. The study performs ordinary least square regression technique and Granger causality test for the model. The results show that economic freedom indicators act as a strong contributor to increase energy consumption in Pakistan, however, Granger causality test in most of the cases does not show any cause-effect relationship between energy variables and economic freedom indicators, except coal consumption with more or less Granger cause economic freedom indicators but not vice versa.