A: Sources of economic growth Questions 1-4 make use of the Excel file Production.xlsx which contains annual data downloaded from the Statistics Canada web site (Table: 36-10-0208-01). The first three columns contain real indexes (with 2012 as the base year) and the last two columns contain values in nominal terms. Assume that the aggregate relationship between the growth rates of outputs and inputs in the Canadian economy can be represented by AY AA AK AN + + (1 - a) Y A K N where Y denotes real output, A total factor productivity, K denotes capital inputs (including land), and N represents labour inputs. The parameter a represents the share of output paid to capital inputs, with the remainder paid to labour inputs. - Question 1 Compute 1 a for each year since 1961 and report the average values over the periods 1961-70, 1971-80, 1981-90, 1991-2000, 2001-10 and 2011-17. Describe any significant movements in the share of income from production going to labour across these decades? Question 2 Compute and report the average annual growth rates of real GDP, capital input and labour input over the periods 1961-70, 1971-80, 1981-90, 1991-2000, 2001-10 and 2011-19. Question 3 What is the implied average annual growth rate of TFP during each of these six decades? (use the average value of a in 2011-17 for the period 2011-19). Question 4 Create a table (like Table 6.3 in the text) showing the decomposition of GDP growth into the contributions from TEP, capital inputs and labour inputs during each decade. Submit the table below. Comment on any significant movements that you notice. 1963 1975 Canada Real gross c Labour inpu Capital inpu Gross domestic Labour compensation 6 Reference p Business sec Business sec Business sec Business sector Business sector 1 Index, 2012=100 Dollars 1961 17.19 32.472 11.362 30,699.91 19,065.78 1962 18.512 33.928 11.808 33,135.19 20,619.66 19.582 34.841 12.295 35,575.16 21,779.05 1964 21.01 36.424 12.988 38,864.97 23,604.87 1965 22.469 38.1 13.874 42,921.90 26,276.51 1966 23.986 40.07 15.021 47,881.74 29,433.05 1967 24.501 40.879 16.167 50,617.00 31,831.84 1968 25.888 41.11 16.878 55,012.70 33,946.07 1969 27.213 42.108 17.728 59,925.31 37,386.48 1970 28.017 42.226 18.559 63,876.21 39,776.40 1971 29.106 43.139 19.353 69,493.96 43,396.00 1972 30.852 44.509 20.366 77,422.68 48,334.22 1973 33.128 47.119 21.723 92,225.30 55,815.69 1974 34.254 48.771 23.243 110,395.62 66,590.50 34.7 48.664 24.525 125,568.22 76,523.03 1976 37.015 48.629 26.306 142,923.76 87,730.28 1977 38.609 49.143 27.499 157,098.79 96,923.59 1978 40.351 51.236 28.595 174,949.94 105,310.88 1979 42.08 54.148 30.264 203,009.27 119,059.04 1980 43.112 55.907 32.328 230,418.82 134,729.63 1981 45.031 57.452 34.364 258,996.63 154,651.07 1982 43.277 54.339 35.014 266,695.75 161,638.38 1983 44.523 54.557 35.75 290,796.38 168,757.70 1984 47.596 56.776 36.787 320,438.72 182,768.45 1985 50.256 59.08 38.281 347,785.37 199,774.47 1986 51.565 61.798 39.521 362,537.54 212,649.10 1987 54.112 64.692 41.35 396,357.38 232,758.83 1988 56.88 67.486 43.785 435,194.02 257,725.55 1989 58.399 69.253 46.166 462,216.24 277,936.30 1990 58.148 69.342 47.558 472,034.85 289,981.14 1991 55.808 67.046 48.636 464,264.68 293,777.02 1992 56.131 66.301 49.462 468,528.03 297,923.44 1993 57.793 67.821 50.181 487,398.87 304,457.72 1994 61.453 70.668 51.689 525,291.81 317,061.62 1995 63.477 72.845 53.266 557,148.75 330,331.11 1996 64.885 75.01 55.162 581,648.06 345,575.82 1997 68.474 77.831 58.202 619,794.80 371,382.60 1998 71.784 80.028 61.804 646,125.46 395,385.19 1999 76.569 82.359 65.381 702,980.89 416,748.20 2000 81.451 84.824 68.841 782,184.68 452,349.46 2001 82.604 85.301 70.787 807,194.29 467,933.62 2002 84.824 86.735 71.983 831,406.82 481,929.20 2003 86.334 88.584 74.087 877,373.44 498,670.06 2004 89.213 91.293 77.275 940,493.92 528,744.51 2005 92.003 92.581 81.618 1,006,063.59 559,004.46 2006 94.427 94.11 86.505 1,062,369.81 593,622.98 2007 96.281 96.084 90.413 1,120,060.71 630,555.15 2008 96.09 97.102 93.896 1,177,368.07 655,156.25 2009 90.929 92.946 93.562 1,069,115.05 634,009.72 2010 94.447 95.864 94.758 1,144,636.09 654,286.16 2011 98.021 97.837 97.273 1,227,991.50 689,760.54 2012 100 100 100 1,259,922.91 723,774.70 2013 2014 2015 2016 2017 2018 2019 102.954 106.571 107.155 107.999 111.857 114.695 116.503 101.233 101.834 103.231 104.175 106.05 108.142 109.331 103.298 1,311,800.01 106.858 1,386,414.36 108.7 1,358,845.04 109.446 1,372,609.54 111.455 1,460,246.75 113.601 .. 115.717 752,520.75 783,018.67 806,125.07 799,836.54 833,174.48 878,628.66 916,890.17 A: Sources of economic growth Questions 1-4 make use of the Excel file Production.xlsx which contains annual data downloaded from the Statistics Canada web site (Table: 36-10-0208-01). The first three columns contain real indexes (with 2012 as the base year) and the last two columns contain values in nominal terms. Assume that the aggregate relationship between the growth rates of outputs and inputs in the Canadian economy can be represented by AY AA AK AN + + (1 - a) Y A K N where Y denotes real output, A total factor productivity, K denotes capital inputs (including land), and N represents labour inputs. The parameter a represents the share of output paid to capital inputs, with the remainder paid to labour inputs. - Question 1 Compute 1 a for each year since 1961 and report the average values over the periods 1961-70, 1971-80, 1981-90, 1991-2000, 2001-10 and 2011-17. Describe any significant movements in the share of income from production going to labour across these decades? Question 2 Compute and report the average annual growth rates of real GDP, capital input and labour input over the periods 1961-70, 1971-80, 1981-90, 1991-2000, 2001-10 and 2011-19. Question 3 What is the implied average annual growth rate of TFP during each of these six decades? (use the average value of a in 2011-17 for the period 2011-19). Question 4 Create a table (like Table 6.3 in the text) showing the decomposition of GDP growth into the contributions from TEP, capital inputs and labour inputs during each decade. Submit the table below. Comment on any significant movements that you notice. 1963 1975 Canada Real gross c Labour inpu Capital inpu Gross domestic Labour compensation 6 Reference p Business sec Business sec Business sec Business sector Business sector 1 Index, 2012=100 Dollars 1961 17.19 32.472 11.362 30,699.91 19,065.78 1962 18.512 33.928 11.808 33,135.19 20,619.66 19.582 34.841 12.295 35,575.16 21,779.05 1964 21.01 36.424 12.988 38,864.97 23,604.87 1965 22.469 38.1 13.874 42,921.90 26,276.51 1966 23.986 40.07 15.021 47,881.74 29,433.05 1967 24.501 40.879 16.167 50,617.00 31,831.84 1968 25.888 41.11 16.878 55,012.70 33,946.07 1969 27.213 42.108 17.728 59,925.31 37,386.48 1970 28.017 42.226 18.559 63,876.21 39,776.40 1971 29.106 43.139 19.353 69,493.96 43,396.00 1972 30.852 44.509 20.366 77,422.68 48,334.22 1973 33.128 47.119 21.723 92,225.30 55,815.69 1974 34.254 48.771 23.243 110,395.62 66,590.50 34.7 48.664 24.525 125,568.22 76,523.03 1976 37.015 48.629 26.306 142,923.76 87,730.28 1977 38.609 49.143 27.499 157,098.79 96,923.59 1978 40.351 51.236 28.595 174,949.94 105,310.88 1979 42.08 54.148 30.264 203,009.27 119,059.04 1980 43.112 55.907 32.328 230,418.82 134,729.63 1981 45.031 57.452 34.364 258,996.63 154,651.07 1982 43.277 54.339 35.014 266,695.75 161,638.38 1983 44.523 54.557 35.75 290,796.38 168,757.70 1984 47.596 56.776 36.787 320,438.72 182,768.45 1985 50.256 59.08 38.281 347,785.37 199,774.47 1986 51.565 61.798 39.521 362,537.54 212,649.10 1987 54.112 64.692 41.35 396,357.38 232,758.83 1988 56.88 67.486 43.785 435,194.02 257,725.55 1989 58.399 69.253 46.166 462,216.24 277,936.30 1990 58.148 69.342 47.558 472,034.85 289,981.14 1991 55.808 67.046 48.636 464,264.68 293,777.02 1992 56.131 66.301 49.462 468,528.03 297,923.44 1993 57.793 67.821 50.181 487,398.87 304,457.72 1994 61.453 70.668 51.689 525,291.81 317,061.62 1995 63.477 72.845 53.266 557,148.75 330,331.11 1996 64.885 75.01 55.162 581,648.06 345,575.82 1997 68.474 77.831 58.202 619,794.80 371,382.60 1998 71.784 80.028 61.804 646,125.46 395,385.19 1999 76.569 82.359 65.381 702,980.89 416,748.20 2000 81.451 84.824 68.841 782,184.68 452,349.46 2001 82.604 85.301 70.787 807,194.29 467,933.62 2002 84.824 86.735 71.983 831,406.82 481,929.20 2003 86.334 88.584 74.087 877,373.44 498,670.06 2004 89.213 91.293 77.275 940,493.92 528,744.51 2005 92.003 92.581 81.618 1,006,063.59 559,004.46 2006 94.427 94.11 86.505 1,062,369.81 593,622.98 2007 96.281 96.084 90.413 1,120,060.71 630,555.15 2008 96.09 97.102 93.896 1,177,368.07 655,156.25 2009 90.929 92.946 93.562 1,069,115.05 634,009.72 2010 94.447 95.864 94.758 1,144,636.09 654,286.16 2011 98.021 97.837 97.273 1,227,991.50 689,760.54 2012 100 100 100 1,259,922.91 723,774.70 2013 2014 2015 2016 2017 2018 2019 102.954 106.571 107.155 107.999 111.857 114.695 116.503 101.233 101.834 103.231 104.175 106.05 108.142 109.331 103.298 1,311,800.01 106.858 1,386,414.36 108.7 1,358,845.04 109.446 1,372,609.54 111.455 1,460,246.75 113.601 .. 115.717 752,520.75 783,018.67 806,125.07 799,836.54 833,174.48 878,628.66 916,890.17