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9 11A98A= A cdn.inst-fs-iad-prod.inscloudgate.net - JINX|K Problem 3. (Computer Exercise) Let's take the Solow growth model to actual data. (a) From FRED, download annual data

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9 11A98A= A cdn.inst-fs-iad-prod.inscloudgate.net - JINX|K Problem 3. (Computer Exercise) Let's take the Solow growth model to actual data. (a) From FRED, download annual data on the real GDP, real capital stock, and population in the United States for the longest period available. On Excel or other spreadsheet software, compute the total factor productivity in every year during this period as Yt At = KOLI-a' where Yt is the real GDP, K, is the real capital stock, and Lt is the population in year t. Assume that a = 1/3. (b) Let's call K" the capital component and L -" the labor component of the output. In a single graph, show (i) the growth rates of output, (ii) growth rates of the total factor productivity, (iii) growth rates of the capital component, and the (iv) growth rates of the labor component. On average during this period, how much of the output growth is explained for by the growths in technology, capital, and labor, respectively? (c) Repeat (a)-(b) for another country of your choice. Compare the results from the two countries. What have you learned about the growth experiences of these two countries? 2

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