Exercise1_07text

Exercise1_07text - EEP151/Econ171 Fall 2007 Alain de Janvry...

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1 8/31/07 EEP151/Econ171 Alain de Janvry Fall 2007 Melissa Hidrobo, Lourdes Rodriguez Exercise 1 Using indicators to characterize development patterns Due September 13, 2007 I. How much difference do PPP exchange rates make in measuring well-being? To compare well being across countries, development economists have used GDPpc measured in US dollars at the PPP exchange rate. 1. Explain why they do this as opposed to using GDPpc measured in US dollars at the official exchange rate. 2. Using the data in Worksheet 1 for 156 countries taken from the World Development Indicators (http://devdata.worldbank.org/dataonline/old-default.htm), graph the schedules of GDPpc-nominal e and of GDPpc-PPP e against the country’s rank based on its GDPpc at the nominal exchange rate. (e denotes exchange rate.) 3. For which countries does the PPP adjustment make a negative difference? Explain why. 4. Identify the three countries with the largest percentage positive PPP adjustment. Name the countries and explain why the difference is large for these countries. II. How long will it take to double GDPpc based on recent performance?
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Exercise1_07text - EEP151/Econ171 Fall 2007 Alain de Janvry...

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