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# problems2 - ECON 407 Advanced Macroeconomics Practice...

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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 time-series 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 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: 1965-1970, 1970-1975, 1975-1980, 1980-1985, and 1985-1990. Give a brief description. What can you say? Write just two lines, add a table with the values.

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