Since no previous study assesses the relative efficacy of government versus private investment on energy consumption in South Asia under the reform initiatives, in this study, we try to fill this gap in a panel framework over the period 1980–2016. As the panel data shows cross-dependencies across the cross-sections, the Pesaran’s Cross-Sectionally Augmented Dickey–Fuller (CADF) and Cross-Sectionally Augmented IPS (CIPS) tests are used to check the stationary properties. Besides, a structural break augmented panel unit root is also done to find the stationary properties in the presence of structural breaks. The Durbin–Hausman test is further applied to identify the variables’ cointegrating relationship. The Dumitrescu–Hurlin panel causality test finds a one-way causality between energy consumption and private investment but no causality between government investment and energy consumption. According to Pool Mean Group (PMG) Panel Autoregressive-Distributive Lag (ARDL) estimation results, there is no significant linkage between government and private investments and energy consumption in the absence of the reform initiatives. On the contrary, in energy sector reform, private investment efficiently stimulates energy consumption in the selected South Asian countries; however, government investment is ineffective in promoting energy consumption. We recommend that policymakers find an optimal institutional reform policy to improve government investment efficiency in South Asia.
- Regulatory reform
- Government investment
- Private investment
- PMG panel ARDL Dumitrescu–Hurlin panel causality test
- South Asia