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3) The following table shows relative capital per person and per capita GDP for some countries from 2007 based on 2005 dollars. The purpose of this exercise is to compute the growth accounting exercise discussed in class by filling in the missing columns of the table to compare countries relative to the US. For the first two empty columns fill in the relative value of capital per person and per capita GDP relative to the US. The next column asks you to write down the predicted per capita GDP relative to the US based on the difference in capital per person if there were no differences in TFP (assume that A is 1 for all countries). Finally, the final column asks you to compute the implied difference in productivity needed to match the data. Comment on the general results that you find. For this exercise assume that a = 1/3. Capital Capital GDP Implied Per capita Predicted Country TFP to per relative to relative to GDP y* match person US US data United 135,877 42,877 1.00 Sates 1.00 1.00 1.00 France 109,023 29,633 Mexico 33,168 11,204 Kenya 2,379 2,025Step by Step Solution
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