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Question 4: Production Function Model and TFP ....... . ... 15 points Suppose, USA and Argentina are both characterized by the following production function Y
Question 4: Production Function Model and TFP ....... . ... 15 points Suppose, USA and Argentina are both characterized by the following production function Y = AK1/3 [2/3 (3) Consider USA and Argentina with the following data for 2015 (in US$), Country GDP ($mill.) Capital ($mill) Labor Force ($ mill.) USA 19000000 65000000 150 Argentina 1000000 3200000 20 (i) (5 points) Using the production function model, calculate the predicted GDP per worker of Ar- gentina relative to the US. (ii) (5 points) Using the numbers above calculate the predicted TFP of Argentina relative to the United States. (iii) (5 points) Using all the information you have, calculate the relative return to capital for Argentina
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