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Question I am taking a macro economics course and need help understanding the Solow Model. Specifically a step by step walk through on to solve

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I am taking a macro economics course and need help understanding the Solow Model. Specifically a step by step walk through on to solve the below practice problem. Thank you in advance.

  1. China

In 2014, GDP in China was still smaller than US GDP, but growing much faster. Let's analyze how will China's economy will fare in the next 15 years or so. Assume it is January 1, 2015 and use the Solow model to estimate economic growth in China up to 2030. It reports data for China's population, employment, GDP, capital stock, and educational attainment between 1975 and 2014. Educational achievement is proxied by average years of schooling. Population and employment are in thousand of individuals. GDP and capital are expressed in millions of 2011 PPP-adjusted US dollars. Assume that the production function is of the form Y = AK(HL)1and that the depreciation rate is 6% per year.

  1. Saving Rate

Use the law of motion for the capital stock in order to obtain estimates of the saving rate in all years 1975-2013.

  1. Future GDP

Assume that between 2015 and 2030, TFP, population, employment, and educational attain- ment will grow at the average rate for the period 1975- 2014 and that the saving rate will be equal to the average saving rate for the same period. Obtain estimates for GDP per capita up to 2030. Comment (briefly) on the strengths and weaknesses of your analysis. What parameter values are you least certain about? What features of the world does the model miss?

  1. Forecasting TFP

How would your forecast change if TFP did not grow at all over the period 2015-2030? How about the scenario in which educational attainment did not grow? Finally, what would happen if both population and employment stayed at the 2014 level throughout the period?

year gdp population employment capital education
1975 $1,242,576.00 905.5804 407.9577 1398982.125 4.102447
1976 $1,230,911.00 921.6882 420.9138 1497865.5 4.2533691
1977 $1,270,306.00 936.5545 432.582 1629328.625 4.4042912
1978 $1,441,441.00 950.5373 445.5044 1797925.75 4.5552134
1979 $1,509,705.00 964.1552 460.5417 1968592.75 4.7061355
1980 $1,542,770.00 977.8374 479.1169 2156994 4.8570576
1981 $1,592,155.00 991.5538 500.9003 2327858.5 4.9477088
1982 $1,737,619.00 1005.329 519.1486 2499923.75 5.03836
1983 $1,861,403.00 1019.698 533.1974 2586460.25 5.1290112
1984 $2,113,989.00 1035.329 546.7159 2769155.25 5.2196625
1985 $2,342,021.00 1052.622 560.2422 2983624.25 5.3103137
1986 $2,463,038.00 1071.835 572.0871 3282196.75 5.3657318
1987 $2,600,514.00 1092.647 582.4245 3572735.75 5.4211499
1988 $2,693,208.00 1114.162 598.1485 3896080.75 5.476568
1989 $2,682,698.00 1135.128 619.0762 4112408.25 5.5319861
1990 $2,692,559.00 1154.606 637.0748 4405169 5.5874043
1991 $2,872,830.00 1172.328 651.2 4603259 5.734796
1992 $3,151,253.00 1188.45 658.215 4911135 5.8821877
1993 $3,496,467.00 1202.983 664.8 5470074.5 6.0295794
1994 $3,697,357.00 1216.067 671.315 6111468.5 6.1769711
1995 $4,108,395.00 1227.841 677.6 6843664.5 6.3243628
1996 $4,275,323.00 1238.235 685.075 7549487.5 6.4446124
1997 $4,484,423.00 1247.259 693.85 8348899.5 6.5648621
1998 $4,480,408.00 1255.263 702.285 9341167 6.6851117
1999 $4,786,411.00 1262.714 710.155 10377540 6.8053614
2000 $5,108,341.00 1269.975 717.395 11468023 6.925611
2001 $5,506,417.00 1277.189 725.55 12694115 6.9981645
2002 $6,113,615.00 1284.35 733.825 14055351 7.0707179
2003 $6,661,583.00 1291.485 740.86 15798115 7.1432714
2004 $7,407,745.00 1298.573 748.16 18093094 7.2158248
2005 $8,209,448.00 1305.601 755.125 20994712 7.2883782
2006 $9,035,262.00 1312.601 761.125 24752358 7.333301
2007 $10,000,000.00 1319.625 766.95 28425092 7.3782237
2008 $10,400,000.00 1326.691 772.35 32259552 7.4231464
2009 $11,400,000.00 1333.807 777.375 36784308 7.4680692
2010 $12,600,000.00 1340.969 781.3768 42218080 7.5129919
2011 $13,800,000.00 1348.174 784.4269 48872912 7.5579146
2012 $14,900,000.00 1355.387 788.8708 54610668 7.6028374
2013 $15,900,000.00 1362.514 793.0223 61477376 7.6477601
2014 $17,100,000.00 1369.436 798.3678 69379696 7.6926828
2015
2016
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2020
2021
2022
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2028
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2030

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