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Assignment #1

ECO208 L0101

2022

Question:  Locate the Penn World Table database and download in excel the following variables for Canada, the United Kingdom, the United States and China for the period 1970 to most recent period available. 1) Real GDP (RGDPE, CGDPE and RGDPNA), 2) Population (POP), 3) number of persons engaged (EMP), 4) average annual hours of workers engaged (AVH), 5) the real        capital services (RKNA), and 6) Total Factor Productivity (RTFPNA).

a. For each country, plot the time series of real output per capita and real output per worker         (please do not include the raw data in your writeup, just the graphs). What differences do you see as we change the measure of real GDP used?  Why do these measures differ? Which series          should we use if we want to examine the living standards of Canada today compared to the US at some point in the past? Based on the data patterns, does it appear that any ofthese countries are  close to their long run steady state? If yes, which ones? Justify your answer.

b. Create a measure of the Solow residual for each country using the real GDP measure RGDPNA and graph it. Describe how you created this measure and what other information you required to do the calculation. If you downloaded any additional series, report what they were and how they were used. Discuss the cross-country differences and similarities. For each country, how does     your measure compare to the measure RTFPNA, and the labor productivity measures created in    part (a)?  If they differ, explain where the differences could come from?

c. Prior to the pandemic there was a debate concerning secular stagnation. Watch the                    presentations of Robert Gordon and Barry Eichengreen at:                                                              https://www.aeaweb.org/webcasts/2015/Stagnation.phpand read the short articles by Joel Mokyr https://cepr.org/voxeu/columns/secular-stagnation-not-your-lifeand the review of work from a    more recenthttps://cepr.org/voxeu/columns/impact-machine-learning-and-ai-uk-economy.           How do Prof. Gordon and Eichengreen define secular stagnation?  Does the data you collected    and analyzed in parts a and b above seem to support a case for secular stagnation for the different countries? How might you model a temporary decrease in technological advance in the Solow     model? How would you model a permanent decrease in technological advance in the Solow         model? Which case does Prof Gordon believe we are facing and do you think he is correct given the evidence you reviewed?  Justify your answers.