ECON7040 – Tutorial 1 answer guide

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ECON7040 – Tutorial 1 answer guide

1. Open the textbookhttps://www3.nd.edu/~esims1/GLS_may_2021.pdf Do exercise 2, page 71-72. Note: population data are from WDI.

a)

Share of government spending

0.00000

SPAIN JAPAN USA


With the exception of Japan, there isn’t any obvious convergence.

b) There is definitely convergence. Germany, Japan, and Spain start off with lower levels of income per capita and subsequently close the gap.

LogRGDP per capita

6

4

2

0

AUSTRALIA CANADA GERMANY SPAIN JAPAN USA

c)

Normally in macroeconomics, GDP growth can be computed by the first difference of the natural log(GDP).

Growtht= log(GDPt ) – log(GDPt- 1)

Compute correlation between 2 series: GDP per capita growth at time t and government spending as a share of GDP at time t- 1.

Correlation is 0.076. these variables are almost uncorrelated.

0.1 0.09 0.08 0.07 0.06 0.05 0.04 0.03 0.02 0.01 0

Real GDP growth and government share

0                                 0.05                               0.1 0.15                               0.2


2. Download data from Maddison project

https://www.rug.nl/ggdc/historicaldevelopment/maddison/releases/maddison-project- database-2020

Replicate the diagram GDP per capita – selected countries in Lecture note, slide 19, select 4 countries and time period of your own interest. Analyse the diagram.

You can use Excel or Stata, R… to do this question.

Refer to Stata do file to draw your diagram using Stata. You can use other software as well.


2023-04-04