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Using Excel and data from the Penn World Tables (Link: https://www.rug.nl/ggdc/productivity/pwt/), please complete the following: (a) Replicate Table (2.1) of the textbook, adding an extra
Using Excel and data from the Penn World Tables (Link: https://www.rug.nl/ggdc/productivity/pwt/), please complete the following:
(a) Replicate Table (2.1) of the textbook, adding an extra column for the period 2010-2018. Comment on your findings.
(b) Replicate Table (2.1) of the textbook, but for Canada instead of USA. Comment on your findings. Please see the footnote for hints1
1-For your estimation, please ignore changes in human capital (this makes things easier). So the relevant equation is (2.15) of the textbook (this means that the numbers you will get will be a bit different from Table 2.1, since they do control for human capital, as seen in the "Labor Composition" row and discussed in the textbook).-From Table 2.1, you can ignore rows 3, 4 and 5 ("Information Technology", "Other capital services" and "Labor Composi- tion").-From the data provided in the Excel file you download, you can compute total hours worked by multiplying "avh" (Average annual hours worked by persons engaged) with "emp" (Number of persons engaged (in millions)): hours=avh*emp.-Then, compute output per hour as the ratio of "rgdpo" (Output-side real GDP at chained PPPs (in mil. 2011US$)) and hours (the one you computed before). Alternatively, you can do it in one step: output per hour = rgdpo/(avh*emp).-For capital stock use "rnna" (Capital stock at constant 2011 national prices (in mil. 2011US$)). Also divide by total hours.-Once you have output per hour and capital per hour for every year, you can compute the annual growth rate of these variables. Then, compute the averages for the relevant periods of analysis (as indicated in the Problem Set question).-Finally, using the average growth rates of output per hour and capital per hour (and assuming Alpha=1/3) you can estimate multifactor productivity (Solow Residual).-The data for USA and Canada starts in 1950, so use 1950 instead of 1948 (as used in the textbook).So the Table you provide should contain a row for output per hour, a row for capital per hour and a row for the estimated multifactor productivity.Step by Step Solution
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