ECON 407 Advanced Macroeconomics
Practice Exercises #2
Posted: February 20, 2009
Instructor: Jos´
e Tessada
Due: March 2, 2009 (6pm in my oﬃce)
Spring 2009
Question 1 Growth Accounting Calculation
The goal of growth accounting is to learn where growth comes from. In particular, we can use
it to estimate the extent to which growth comes from capital accumulation, greater labor force
participation, or “technology improvements.” Standard growth accounting uses timeseries data on
factor quantities to determine the sources of an economy’s growth. In this problem, you will perform
a simple growth accounting exercise for Canada and Chile.
(a) Go to the Penn World Tables online at
datacentre2.chass.utoronto.ca/pwt/
. Please retrieve
the following three series for both Canada and Chile (you will only need the numbers for the
following years: 1965, 1970, 1975, 1980, 1985, and 1990).
1
(i) Real GDP per capita,
Y/P
(in 1985 International prices).
(ii) Real GDP per worker,
Y/L
(in 1985 International prices).
(iii) Capital Stock per worker,
K/L
(in 1985 International prices).
Note: if there are more than one series available for each of them, use that labeled as “chain”
or “chain series”.
Using the data, calculate the annualized growth rate for each of these three variables from 1965
1990. Include these growth rates and the above data in a table. For this, use the following
formula
g
X
=
±
X
ﬁnal
X
initial
²
1
/
(ﬁnal

initial)

1
where
g
X
is the growth rate of variable
X
between
t
=initial and
t
=ﬁnal,
X
t
is the value of
variable
X
in year
t
, and ﬁnal and initial represent the ﬁrst and last year of the period you are
looking at.
How does Chile’s real GDP per capita grow rate compare to Canada’s? Is the gap for the Real
GDP per worker growth rates smaller or bigger?
(b) Compare the growth rates of real GDP per capita, real GDP per worker, and the capital stock
per worker for the periods: 19651970, 19701975, 19751980, 19801985, and 19851990. Give
a brief description. What can you say? Write just two lines, add a table with the values.
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 Spring '08
 SABELHAUS
 Macroeconomics

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