Answer to Question #117263 in Economics for Joey Gilmour

Question

Use the following variables
rgdpna: Reel GDP (Y)
rnna: capital stock (K)
pop: population (L)
hc: Human capital (H)

Use following values for d=0.05, =1/3, g=0. For the 1980-2017 period, please

1. Calculate the saving/investment ratio (s) by using the capital accumulation formula: K=sY-dK. Calculate the steady state income per capital level, y*. Compare it with the actual income per capita, y.
2. Repeat the pervious calculation for the extended Solow model (with human capital). Suppose that A=1.
3. Apply the growth accounting analysis for the 1980-2017 period for each decade (i.e.; 1980-89, 1990-99, … 2010-17) and for the whole period seperately. Present your results in tables and interpret them.

Thank you so much!

Answer 1

there is a direct proportional relationship between real GDP and the accumulation of capital, labor and population growth