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4. Suppose that a researcher estimates a gravity model for trade and nds that the following relationship holds: 2 1 h'ng'jt = g 111(Kt) +
4. Suppose that a researcher estimates a gravity model for trade and nds that the following relationship holds: 2 1 h'ng'jt = g 111(Kt) + g 111(3'3t) 2111(1)\") + Eijt where Xijt is exports from i to j in year t, and Y\" and Y}: are the GDP ofi and j in year t, respectively. Dij is the distance between the two countries, and 615; is an error term. Consider three countries - A, B1 and C - where DAG = 4930- Suppose that differences in economic growth are such that 1714,2015 = 4YA'20001 YB,2015 = 0.5YB,20[}0, and 1703015 = 21/032000. What is the numerical value of the following ratio? (Note that "hats\" represent predicted values) (X CA,2015/ 3014,2000\" (X 03,2015 / 2032000) A 0.5 B 2 C l D 8 E 4
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