The empirical fit of the production model: The table below reports per capita GDP and capital per person in the year 2010 for 10 countries. Your task is to fill in the missing columns of the table.
(a) Given the values in columns 1 and 2, fill in columns 3 and 4. That is, compute per capita GDP and capital per person relative to the U.S. values.
(b) In columns 5, use the production model(with a capital exponent of 1/3) to compute predicted per capita GDP for each country relative to the United States, assuming there are no TFP differences.
(c) In Column 6, compute the level of TFP for each country that is needed to match up the model and the data.
(d) Comment on the general results you find.
Country
In 2005 dollars
Relative to the U.S. values (U.S. = 1)
Capital
per
person
Per
Capita
GDP
Capital
per
person
Per
capita
GDP
Predicted
y*
Implies
TFP to
match
data
Unites States
124,162
41.365
1,000
1,000
1,000
1,000
Canada
110,132
37,104
France
100,668
31,299
Hong Kong
136,360
38,685
South Korea
101,506
26,609
Indonesia
9,173
3,966
Argentina
29390
12,340
Mexico
35,887
11,939
Kenya
2,125
1,247
Ethiopia
977
680
The empirical fit of the production model: The table below reports per capita GDP and capital per person in the year 2010 for 10 countries. Your task is to fill in the missing columns of the table.
(a) Given the values in columns 1 and 2, fill in columns 3 and 4. That is, compute per capita GDP and capital per person relative to the U.S. values.
(b) In columns 5, use the production model(with a capital exponent of 1/3) to compute predicted per capita GDP for each country relative to the United States, assuming there are no TFP differences.
(c) In Column 6, compute the level of TFP for each country that is needed to match up the model and the data.
(d) Comment on the general results you find.
Country |
In 2005 dollars |
Relative to the U.S. values (U.S. = 1) |
||||
Capital per person |
Per Capita GDP |
Capital per person |
Per capita GDP |
Predicted y* |
Implies TFP to match data |
|
Unites States |
124,162 |
41.365 |
1,000 |
1,000 |
1,000 |
1,000 |
Canada |
110,132 |
37,104 |
||||
France |
100,668 |
31,299 |
||||
Hong Kong |
136,360 |
38,685 |
||||
South Korea |
101,506 |
26,609 |
||||
Indonesia |
9,173 |
3,966 |
||||
Argentina |
29390 |
12,340 |
||||
Mexico |
35,887 |
11,939 |
||||
Kenya |
2,125 |
1,247 |
||||
Ethiopia |
977 |
680 |
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Related textbook solutions
Related questions
1) Assume there is a simple economy where people consume only 2 goods, food, and clothing. Further, assume that the market basket of goods used to compute the CPI consists of 100 units of food and 20 units of clothing.
|
Food |
Clothing |
2004 price per unit |
$8 |
$20 |
2005 price per unit |
$12 |
$40 |
Compute the percentage changes in the price of food and the percentage change in the price of clothing between 2004 and 2005.
Calculate the percentage change in the CPI between 2004 and 2005.
Do you think the CPI price changes affect all consumers in the economy to the same extent? Explain.
2) Calculate how much each of the following items is worth in terms of today's dollars using 180 as the price index for today.
a. In 1925, the CPI was 18 and the price of a movie ticket was $0.30.
b. In 1930, the CPI was 14 and a cook earned $20 a week.
c. In 1940, the CPI was 16 and a gallon of gas cost $0.20.
3) The table below uses data for 3 hypothetical countries. All the number values are in thousands. Complete the blank entries in the table below.
Country |
Adult Population |
Labor Force |
Employed |
Unemployed |
Unemployment Rate |
Labor-Force Participation Rate |
A |
120,000 |
60,000 |
4,500 |
|||
B |
28,000 |
3,000 |
60 |
|||
C |
70,000 |
40,000 |
10 |
4) The following table indicates U.S. real GDP data. Calculate real GDP per person for 1987 and 2005. Then use real GDP per capita to compute the percentage change in real GDP per person from 1987 to 2005.
Year |
Real GDP (2000 prices) (in million) |
Population (in million) |
1987 |
$6,435,000 |
243 |
2005 |
$11,092,000 |
296.6 |