Investigating Causal Relations of Economic Variables: Capital, GDP, Labour and Population in Sweden 1870-2000

Abstract

The main objective of this paper was to study the causal relationships of the economic variables GDP, labour, capital and population in Sweden during the time period 1870 to 2000. In this paper the theory of unit root tests, vector auto regressive (VAR) model and GrangerCausality test were ased to find the causality of the variables. Augmented Dickey Fuller test was also used as unit root test. By applying all these tests and methods, the causal relationship among the economic variables has been established.