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:] [Fixed Effect Gravity.] Estimate the equation above by OLS , replacing log GDP_d with one set of country dummies, and log GDP_o with a

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:] ["Fixed Effect" Gravity.] Estimate the equation above by OLS , replacing log GDP_d with one set of country dummies, and log GDP_o with a second set of country dummies. STAT A has a few options to construct these dummy variables. For instance, you can use the command "egen" together with "group ". Name the sets of dummies "dummy d " and "dummy o ", respectively Did the coefficient on log of distance change with respect to the estimates in c)? Name two variables that the country dummies may be capturing QUESTION 3. U.S. Trade Data. 15 POINTS. This problem will introduce students to one of the most common sources for U .S. economic data and give them an overview of the magnitudes and patterns of trade in the U .S. for the past century. aj The Bureau of Economic Analysis (BEA) prepares the official economics accounts for the United States, including the international accounts. Go to the BEA website: https//www.bea.gow. Click on the tab "Tools" and select "Interactive Data". Select "GDP & Personal Income" under Domestic Data. Click on "Begin using the data ..." and download the following table [in Excel or CVS format ) : 1. Choose Table 1.1.5 "Gross Domestic Product" in "Section 1-- Domestic Product and Income ". This table contains the nominal values of the major components of GDP. 2. "Modify " the table to display all years of data ( annually ). 3. "Download " data in CVS or XLS format . Choose a place to save the file in your computer bj Use EXCEL. To visualize how US trade has grown, create two time series: exports/GDP and imports/GDP. [Why is it useful to divide a trade flow by G DP ?) A quick check: exports/G DP in 1929 is 0.0564 c) Use EXCEL. Make a chart of the two series you created in part bj with years on the x- axis and share of GDP on the y-axis. Be sure to label the series Answer the following questions : i How much did exports, as a fraction of GDP, grow from 1950-1972? How much did exports grow from 1972 -94 e) How much did exports, as a fraction of GDP, grow from 2000-2020? How much did imports grow from 2000 -2020 ? f) As you found in part e., U.S. imports have been growing more quickly than exports in the last 20 years. When a country is importing more than it is exporting, that country is said to be running a trade deficit . In what other period did the United States rum a large trade deficit

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