TABLE 7.11 Greek Industrial Capital-to-Labor Sector Observation Output* Capital Labort Ratio 1961 35.858 59.600 637.0 0.0936 Source: I am indebted to George K. Zestos of 1962 37.504 64.200 643.2 0.0998 Christopher Newport 1963 40.378 68.800 651.0 0.1057 University, Virginia, for these 1964 46.147 75.500 685.7 0.1101 data. 1965 51.047 84.400 710.7 0.1188 1966 53.871 91.800 724.3 0.1267 1967 56.834 99.900 735.2 0.1359 1968 65.439 109.100 760.3 0.1435 1969 74.939 120.700 777.6 0.1552 1970 80.976 132.000 780.8 0.1691 1971 90.802 146.600 825.8 0.1775 1972 101.955 162.700 864.1 0.1883 1973 114.367 180.600 894.2 0.2020 1974 101.823 197.100 891.2 0.2212 1975 107.572 209.600 887.5 0.2362 1976 117.600 221.900 892.3 0.2487 1977 123.224 232.500 930.1 0.2500 1978 130.971 243.500 969.9 0.2511 1979 138.842 257.700 1006.9 0.2559 1980 135.486 274.400 1020.9 0.2688 1981 133.441 289.500 1017.1 0.2846 1982 130.388 301.900 1016.1 0.2971 1983 130.615 314.900 1008.1 0.3124 1984 132.244 327.700 985.1 0.3327 1985 137.318 339.400 977.1 0.3474 1986 137.468 349.492 1007.2 0.3470 1987 135.750 358.231 1000.0 0.3582 *Billions of Drachmas at constant 1970 prices. Thousands of workers per year.7.22. Table 7.11 gives data for the manufacturing sector of the Greek economy for the period 1961-1987. a. See if the CobbDouglas production function fits the data given in the table and interpret the results. What general conclusion do you draw? b. Now consider the following model: Output/labor = A(K/L)P e* where the regressand represents labor productivity and the regressor represents the capital labor ratio. What is the economic significance of such a relationship, if any? Estimate the parameters of this model and interpret your results