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Many studies have computed the carbon dioxide emissions (CO2Es) associated with energy consumption, overall population, imports, manufacturing industries, and financial development in various countries. However, past studies have ignored the impact of CO2Es on fossil fuel energy, domestic economy, rural–urban unemployment, rural–urban population, services value-added, and fiscal deficit, especially in the context of Pakistan. Thus, to avoid the problems of mis-specification, sustainable growth, and carbon reduction simultaneously, it is necessary to study how to accomplish the time-varying relationship between factors. The present study applied autoregressive distributed lag (ARDL) model for cointegration between CO2Es and its determinants to test long-run and short-run effects from 1975 to 2018. The findings are as follows: first, in the short run, CO2Es, fossil fuel, and services value added show the unidirectional causality, while CO2Es, economic growth, rural–urban population, rural–urban unemployment, and fiscal deficit have bidirectional causality among them. Second, in the long run, we found bidirectional causality between CO2Es and its determinants. Finally, the diagnostic estimations, cumulative sum, and cumulative sum of squares check the long-run association between the selected variables and present the constancy of coefficients. The empirical outcomes give new insights for policymakers to regulate renewable technology investment in the energy sector for the improvement of environmental excellence. Related to the key results, the focused policies are presented below. [ABSTRACT FROM AUTHOR]

During the last 4 decades, the world has changed its focus from imported energy resources to cheap resources either renewable or non-renewable for economic and social development. Currently, coal is the cheapest source of energy in Pakistan that can be used to fulfil the energy demands. This study inspects the causal association among domestic factors such as gross domestic product, coal consumption, rural–urban unemployment, rural–urban population, fiscal deficit and services value added from 1981 to 2017. This paper applies modern techniques to inspect the association between coal consumption and economic development of Pakistan. For this, Ng–Perron unit root test, autoregressive distributed lag models and vector error correction models are employed to examine the causalities between the factors. The research finds a long-run and short-run bidirectional association between economic improvement and coal use. In the short run, the results found a bidirectional causality among gross domestic product (GDP), coal consumption, unemployment, population and overall fiscal deficit. In the long run, GDP and coal use have a bidirectional association and the same is true with the other factors. During the period, cumulative sum (CUSUM) and CUSUM square have proved that structure is good. Moreover, we support the coal consumption in producing cheap energy that clues to financial development and unemployment reduction in Pakistan. The policy suggestions for the consequences are provided below. [ABSTRACT FROM AUTHOR]