Impact of Energy Policy Uncertainty on Firm-Level Capital Expenditure: A Study of Pakistani Firms
Keywords:
Energy Uncertainty (EU), Corporate Investment, Developing Economy, Pak- istan.Abstract
This study investigates the impact of the Energy-related Uncertainty Index (EU) on corporate investment in non-financial listed companies in Pakistan from 2010 to 2022. Utilizing a panel regression model with fixed effects, the analysis reveals a statistically significant inverse relationship between energy-related uncertainty and corporate investment. A 1% increase in the EU corresponds to a 0.052% decrease in corporate investment, highlighting the macroeconomic implications of energy uncertainty. The inclusion of control variables such as financial leverage, cash flows, and firm size further elucidates the factors influencing investment decisions. The findings highlight the need for stable energy policies to foster a conducive investment environment. Future research directions suggest broader geographic analysis, dynamic panel models, alternative measures of uncertainty, and sector-specific stud-
ies.
JEL Classification: C23, D80, G31, Q43