Demystifying the causality links among remittances, energy consumption, carbon emission, financial development and economic growth: evidence from Pakistan

Purpose This paper aims to examine the inter-links among remittances, renewable energy consumption (EC), non-renewable EC, financial development, carbon emissions and economic growth in Pakistan from 1991 to 2022. Design/methodology/approach Johansen cointegration test and the VECM Granger causality test are employed to scrutinize dynamic relationships among variables while fully modified OLS is used to estimate long-run variables. Findings Results confirm a bidirectional causality between non-renewable EC and economic growth. Short-run estimates indicated that labor force, CO2e emissions and non-renewable EC drive growth, while economic growth drives capital formation. Most importantly, remittances and renewable energy positively affect long-run economic growth, underscoring their crucial role in advancing Pakistan's economic growth. Practical implications Findings call for expanding remittances. The Pakistani government should adopt appropriate measures to dedicate these funds to helpful activities with a view to boosting economic growth and people’s well-being. Further renewable energy should be increased to stimulate economic growth. Originality/value Previous studies ignore multidimensional effects of disaggregated EC and remittances on economic growth. Given their inextricable link, this study aims to fill a gap in the literature.