Empowering Sustainable Development of Pakistan: The Relationship between Inflation and CO2 Emissions Using ARDL Model

Inflation can expect cause devastating effect wherever high inflation can dangerous for economic and social circumstances. The current study inspects the impact of inflation rate, unemployment, financial development and renewable energy consumption on CO2 emissions, in Pakistan during the time period of 1981 to 2020 by employing ARDL model to estimate long run and short relationship among the variables. The empirical results depict a positive and significant relation was found between inflation rate, unemployment rate, financial development and CO2 emissions in the short run and long run. While renewable energy consumption has negative impact on CO2 emissions. Based on the results, this study suggested the policy makers to support a robust role of inflation stability in attaining objectives associated to the decline of greenhouse gasses. Financial institutions offer subsidies for low-carbon investments. The government should plan subsidies to encourage the development and use of renewable energy resources.