U.S. and France had similar economic paths in terms of growth from 1950 to 1980. In particular, the average annual growth of GDP per capita in France was around 4% from 1950 to 1965, and then from 1965 to 1980 it was around 3%. The U.S. GDP per capita increased by annual average of 3% from 1950 to 1980. During these years, in both countries about half of the population was working, and there was no significant change in the employment to population ratio.

However, from 1980 to 2010, the economic paths of the two countries starting differentiating. Specifically, while the U.S. continued growing at the same pace, France's growth slowed down to an average annual rate of around 2%. During this time, the employment to population ratio for France was declining by an annual average of 1%. The employment to population ratio for the U.S. continued to remain constant.

During 1950 - 2010, both countries are assumed to share the same population growth of 2% per year, the same constant capital depreciation rate d and the same constant savings rate s. Further, assume that production in both countries follows a Cobb-Douglas function: Y = AK^(1/3)L^(2/3).

^ This is all the info given to solve the question above.

Suppose that the TFP in both countries grows at the same average annual rate you found in question 12 and 13. Then, what can account for the decline in the annual average growth rate of GDP per capita in France from 1980? Hint: Use the growth accounting equation and the steady state solution. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). B I S Paragraph Arial 14px > ili ili