Economics

Suppose you are one of the consultants for an economic development consulting agency, and you are required to estimate an economic growth model for a panel of four countries using annual data starting from 1990 to 2010. The agency wants you to determine if drivers of economic growth differ across groupings of G7 economies. As a consultant of the agency, you are required to use the G7 economies in the IMF's World's Economic Outlook report under the following groupings. Group One: United Kingdom, United States of America, Germany, Canada Group two: France, Germany, United Kingdom, Italy Group three: United Kingdom, Germany, France, United States of America Students whose surname start with a-h is group one; i-q is group two; and r-z is group three You must obtain this data from the International Monetary Fund World's Economic Outlook (WEO) database. The economic growth model you are required to estimate is as follows: Where: = 0 + 1 + 2 + 3 + Growth: annual GDP (constant prices) growth rate Inflation: annual consumer price inflation rate (end of period values), Popg: annual population growth rate** Expg: annual Volume of Exports of goods and services growth rate **You need to calculate the annual population growth rate yourself, using the statistics of population in millions 3.1 Estimate the economic growth model using the fixed effects, random effects and pooled OLS models and comment on your results. Remember to clearly state your surname and the group number that you are estimating. Failure to do so will result in you getting zero marks for this question. (8) 3.2 Which model between the fixed effects and random effects will you choose? Explain your answer (2)