I need this assignment done
A: Sources of economic growth Question 1 Compute for each year since 1961 and report the average values over the periods 1961‐70, 1971‐80, 1981‐90, 1991‐2000, 2001‐10 and 2011‐17. Describe any significant movements in the share of income from production going to labour across these decades? Question 2 Compute and report the average annual growth rates of real GDP, capital input and labour input over the periods 1961‐70, 1971‐80, 1981‐90, 1991‐2000, 2001‐10 and 2011‐19. Question 3 What is the implied average annual growth rate of TFP during each of these six decades? (use the average value of in 2011‐17 for the period 2011‐19). Question 4 Create a table (like Table 6.3 in the text) showing the decomposition of GDP growth into the contributions from TFP, capital inputs and labour inputs during each decade. Submit the table below. Comment on any significant movements that you notice. B: Solow model B1: The general case (questions 5‐8) Question 5 Department of Economics Queen's University ECON222: Macroeconomic Theory I Professor: Huw Lloyd-Ellis Assignment #2 Due: 10pm, November 10, 2021 Questions 1‐4 make use of the Excel file Production.xlsx which contains annual data downloaded from the Statistics Canada web site (Table: 36‐10‐0208‐01). The first three columns contain real indexes (with 2012 as the base year) and the last two columns contain values in nominal terms. Assume that the aggregate relationship between the growth rates of outputs and inputs in the Canadian economy can be represented by where denotes real output, total factor productivity, denotes capital inputs (including land), and represents labour inputs. The parameter represents the share of output paid to capital inputs, with the remainder paid to labour inputs. = + α + (1 − α) ΔY Y ΔA A ΔK K ΔN N Y A K N α 1 − α α Consider an economy that is described by a Solow (neoclassical) growth model. The savings rate is given by , population growth by and the rate of physical depreciation by . Aggregate output, , is given by the aggregate production function where denotes total factor productivity, denotes the capital stock, denotes the size of the work force and is a parameter. Assume that and are constant over time. Questions 5 to 12 relate to this information. s n d Y Y = A ,K bN 1−b A K N b < 1 a b https://onq.queensu.ca/content/enforced/571847-econ222002f21/assignments/production.xlsx https://onq.queensu.ca/content/enforced/571847-econ222002f21/assignments/production.xlsx output per worker, , in this economy can be expressed as a function, , of capital per worker, , where question 6 the steady state capital per worker is given by question 7 steady state consumption per worker is given by y f(k) k f(k) = ak 1 b f(k) = ak 1 1−b f(k) = ak1−b f(k) = akb sa n + d = (k∗ n + d sa ) 1 1−b = (k∗ sa n + d ) 1 1−b =k∗ n + d sa = a(c∗ n + d sa ) b 1−b = (1 − s)a( )c∗ n + d sa = a( )c∗ sa n + d = (1 − s)a(c∗ sa n + d ) b 1−b question 8 an increase in total factor productivity, , has the following impacts in the steady state: b2: special cases (questions 9‐12) question 9 if , what are the steady state values of and ? question 10 if the savings rate decreases to , what are the implied steady state values of and ? question 11 if the savings rate increases to , what are the implied steady state values of and ? a both output per worker and consumption per worker increase. the impact on output per worker is ambiguous but consumption per worker increases. output per worker increases but consumption per worker decreases. output per worker increases but the impact on consumption per worker is ambiguous. suppose , , and .a = 1 b = 0. 5 d = 0. 08 n = 0. 02 s = 0. 5 y c = 10; = 5y∗ c∗ = 25; = 5y∗ c∗ = 25; = 12.5y∗ c∗ = 5; = 2.5y∗ c∗ s = 0. 4 y c = 25; = 15y∗ c∗ = 4; = 2.4y∗ c∗ = 5; = 2.5y∗ c∗ = 16; = 12.7y∗ c∗ s = 0. 6 y c question 12 the "golden rule" level of the capital stock per worker is given by c: money demand and interest rates c1: money demand elasticities question 13 what is the income elasticity of money demand? question 14 what is the interest elasticity of money demand? = 16; = 9.6y∗ c∗ = 5; = 3y∗ c∗ = 6; = 2.4y∗ c∗ = 36; = 14.4y∗ c∗ = 9kgr = 36kgr = 16kgr = 25kgr for questions 13‐17, assume that the real money demand function is , where is real output, is the real interest rate. l (y , i) y i questions 13 and 14 use the following information: during one year income rises by 3% and the nominal interest rate rises from 5% to 6%, while real money demand rises by 1%; and in another year, income falls by 3.5%, the nominal interest rate falls from 4% to 3%, while real money demand falls by 1%. 0.1 ‐1 ‐0.1 1 c2: real demand for money question 15 by what percentage does the real demand for money differ from its initial value if output increases to (and remains at )? question 16 by what percentage does the real demand for money differ from its initial value if the nominal interest rate increases to (and remains at )? question 17 suppose that the interest rate increases to . what would real output have to be in order for the real demand for money to remain at its initial value? ‐0.1 1 ‐1 0.1 for questions 15‐17 suppose that real output is initially and the interest rate is at an initial rate of per year. y = 250 i = 0. 05 y = 260 i 0. 05 the real demand for money will be 4% higher. the real demand for money will be 2% higher. the real demand for money will be 4% lower. the real demand for money will be 2% lower. i = 0. 06 y 250 the real demand for money will be 4% higher. the real demand for money will be 4% lower. the real demand for money will be 2% lower. the real demand for money will be 2% higher. i = 0. 06 245 500 255 250 d: asset market equilibrium question 18 in year 1, income is , the money supply is and the price level is . what is the equilibrium nominal interest rate? question 19 what is "velocity" in this equilibrium ? question 20 in year 2, the price level rises to . assuming and remain unchanged. what are the nominal interest rate and velocity in year 2? question 21 suppose now the central bank sets the nominal money supply depending according to a "policy rule" which depends on income and the price level: for questions 18‐22, assume that the real money demand function is given by where denotes the price level, denotes aggregate income and represents the nominal interest rate. = 640 + 0.1y − 5000i m d p p y i y = 1000 m = 980 p = 2 0.10 0.05 0.06 0.01 2.27 2.04 0.44 0.49 p = 2. 23 y m i = 7.5%; v = 2.04 i = 5.5%; v = 2.23 i = 6%; v = 2.27 i = 3%; v = 1.31 if the price level increases from 2 in year 1 to 2.23 in year 2, how does the nominal interest rate change in this case? question 22 if the expected inflation rate equals the actual inflation rate between years 1 and 2, what is the real interest rate in year 1? e: variable vs. fixed mortgage rates question 23 why do you think mclister believes that mortgage "rate risk has risen meaningfully"? what do you think he means when he says that "the bond market concurs"? question 24 why do you think it might be the case that "if the central bank acts too late, short term price pressures can become long term price pressures"? question 25 what does mclister mean when he says simulations show "a four‐ or five‐ year fixed easily outperforming a floating rate mortgage"? if this is true, how do you think people will try to adjust their mortgages? m = 1100 + 0.1y – 110p . from 5% to 6.13% from 5% to 4.55% from 5% to 6.24% from 6% to 5% 5% 11.5% 6.24% ‐6.5% please the read following opinion piece by robert mclister in the globe and mail, report on business (oct. 28, 2021) and answer questions 23‐25: "with higher interest rates ahead, it is likely time to lock in your mortgage". https://onq.queensu.ca/content/enforced/571847-econ222002f21/assignments/mortgagerates.pdf https://onq.queensu.ca/content/enforced/571847-econ222002f21/assignments/mortgagerates.pdf 3610020801-eng multifactor productivity, value-added, capital input and labour input in the aggregate business sector and major sub-sectors, by industry frequency: annual table: 36-10-0208-01 (formerly cansim 383-0021) release date: 2021-04-19 geography: canada canada real gross domestic product (gdp) 2labour input 3capital input 4gross domestic product (gdp) 5labour compensation 6 reference periodbusiness sector 1business sector 1business sector 1business sector 1business sector 1 index, 2012=100dollars 196117.1932.47211.36230,699.9119,065.78 196218.51233.92811.80833,135.1920,619.66 196319.58234.84112.29535,575.1621,779.05 196421.0136.42412.98838,864.9723,604.87 196522.46938.113.87442,921.9026,276.51 196623.98640.0715.02147,881.7429,433.05 196724.50140.87916.16750,617.0031,831.84 196825.88841.1116.87855,012.7033,946.07 196927.21342.10817.72859,925.3137,386.48 197028.01742.22618.55963,876.2139,776.40 197129.10643.13919.35369,493.9643,396.00 197230.85244.50920.36677,422.6848,334.22 197333.12847.11921.72392,225.3055,815.69 197434.25448.77123.243110,395.6266,590.50 197534.748.66424.525125,568.2276,523.03 197637.01548.62926.306142,923.7687,730.28 197738.60949.14327.499157,098.7996,923.59 197840.35151.23628.595174,949.94105,310.88 197942.0854.14830.264203,009.27119,059.04 198043.11255.90732.328230,418.82134,729.63 198145.03157.45234.364258,996.63154,651.07 198243.27754.33935.014266,695.75161,638.38 198344.52354.55735.75290,796.38168,757.70 198447.59656.77636.787320,438.72182,768.45 198550.25659.0838.281347,785.37199,774.47 198651.56561.79839.521362,537.54212,649.10 198754.11264.69241.35396,357.38232,758.83 198856.8867.48643.785435,194.02257,725.55 198958.39969.25346.166462,216.24277,936.30 199058.14869.34247.558472,034.85289,981.14 199155.80867.04648.636464,264.68293,777.02 199256.13166.30149.462468,528.03297,923.44 199357.79367.82150.181487,398.87304 1="" a="" b="" https://onq.queensu.ca/content/enforced/571847-econ222002f21/assignments/production.xlsx="" https://onq.queensu.ca/content/enforced/571847-econ222002f21/assignments/production.xlsx="" output="" per="" worker,="" ,="" in="" this="" economy="" can="" be="" expressed="" as="" a="" function,="" ,="" of="" capital="" per="" worker,="" ,="" where="" question="" 6="" the="" steady="" state="" capital="" per="" worker="" is="" given="" by="" question="" 7="" steady="" state="" consumption="" per="" worker="" is="" given="" by="" y="" f(k)="" k="" f(k)="Ak" 1="" b="" f(k)="Ak" 1="" 1−b="" f(k)="Ak1−b" f(k)="Akb" sa="" n="" +="" d="(k∗" n="" +="" d="" sa="" )="" 1="" 1−b="(k∗" sa="" n="" +="" d="" )="" 1="" 1−b="k∗" n="" +="" d="" sa="A(c∗" n="" +="" d="" sa="" )="" b="" 1−b="(1" −="" s)a(="" )c∗="" n="" +="" d="" sa="A(" )c∗="" sa="" n="" +="" d="(1" −="" s)a(c∗="" sa="" n="" +="" d="" )="" b="" 1−b="" question="" 8="" an="" increase="" in="" total="" factor="" productivity,="" ,="" has="" the="" following="" impacts="" in="" the="" steady="" state:="" b2:="" special="" cases="" (questions="" 9‐12)="" question="" 9="" if="" ,="" what="" are="" the="" steady="" state="" values="" of="" and="" question="" 10="" if="" the="" savings="" rate="" decreases="" to="" ,="" what="" are="" the="" implied="" steady="" state="" values="" of="" and="" question="" 11="" if="" the="" savings="" rate="" increases="" to="" ,="" what="" are="" the="" implied="" steady="" state="" values="" of="" and="" a="" both="" output="" per="" worker="" and="" consumption="" per="" worker="" increase.="" the="" impact="" on="" output="" per="" worker="" is="" ambiguous="" but="" consumption="" per="" worker="" increases.="" output="" per="" worker="" increases="" but="" consumption="" per="" worker="" decreases.="" output="" per="" worker="" increases="" but="" the="" impact="" on="" consumption="" per="" worker="" is="" ambiguous.="" suppose="" ,="" ,="" and="" .a="1" b="0." 5="" d="0." 08="" n="0." 02="" s="0." 5="" y="" c="10;" =="" 5y∗="" c∗="25;" =="" 5y∗="" c∗="25;" =="" 12.5y∗="" c∗="5;" =="" 2.5y∗="" c∗="" s="0." 4="" y="" c="25;" =="" 15y∗="" c∗="4;" =="" 2.4y∗="" c∗="5;" =="" 2.5y∗="" c∗="16;" =="" 12.7y∗="" c∗="" s="0." 6="" y="" c="" question="" 12="" the="" "golden="" rule"="" level="" of="" the="" capital="" stock="" per="" worker="" is="" given="" by="" c:="" money="" demand="" and="" interest="" rates="" c1:="" money="" demand="" elasticities="" question="" 13="" what="" is="" the="" income="" elasticity="" of="" money="" demand?="" question="" 14="" what="" is="" the="" interest="" elasticity="" of="" money="" demand?="16;" =="" 9.6y∗="" c∗="5;" =="" 3y∗="" c∗="6;" =="" 2.4y∗="" c∗="36;" =="" 14.4y∗="" c∗="9kGR" =="" 36kgr="16kGR" =="" 25kgr="" for="" questions="" 13‐17,="" assume="" that="" the="" real="" money="" demand="" function="" is="" ,="" where="" is="" real="" output,="" is="" the="" real="" interest="" rate.="" l="" (y="" ,="" i)="" y="" i="" questions="" 13="" and="" 14="" use="" the="" following="" information:="" during="" one="" year="" income="" rises="" by="" 3%="" and="" the="" nominal="" interest="" rate="" rises="" from="" 5%="" to="" 6%,="" while="" real="" money="" demand="" rises="" by="" 1%;="" and="" in="" another="" year,="" income="" falls="" by="" 3.5%,="" the="" nominal="" interest="" rate="" falls="" from="" 4%="" to="" 3%,="" while="" real="" money="" demand="" falls="" by="" 1%.="" 0.1="" ‐1="" ‐0.1="" 1="" c2:="" real="" demand="" for="" money="" question="" 15="" by="" what="" percentage="" does="" the="" real="" demand="" for="" money="" differ="" from="" its="" initial="" value="" if="" output="" increases="" to="" (and="" remains="" at="" )?="" question="" 16="" by="" what="" percentage="" does="" the="" real="" demand="" for="" money="" differ="" from="" its="" initial="" value="" if="" the="" nominal="" interest="" rate="" increases="" to="" (and="" remains="" at="" )?="" question="" 17="" suppose="" that="" the="" interest="" rate="" increases="" to="" .="" what="" would="" real="" output="" have="" to="" be="" in="" order="" for="" the="" real="" demand="" for="" money="" to="" remain="" at="" its="" initial="" value?="" ‐0.1="" 1="" ‐1="" 0.1="" for="" questions="" 15‐17="" suppose="" that="" real="" output="" is="" initially="" and="" the="" interest="" rate="" is="" at="" an="" initial="" rate="" of="" per="" year.="" y="" =" 250" i =" 0." 05="" y="" =" 260" i="" 0.="" 05="" the="" real="" demand="" for="" money="" will="" be="" 4%="" higher.="" the="" real="" demand="" for="" money="" will="" be="" 2%="" higher.="" the="" real="" demand="" for="" money="" will="" be="" 4%="" lower.="" the="" real="" demand="" for="" money="" will="" be="" 2%="" lower.="" i =" 0." 06="" y="" 250="" the="" real="" demand="" for="" money="" will="" be="" 4%="" higher.="" the="" real="" demand="" for="" money="" will="" be="" 4%="" lower.="" the="" real="" demand="" for="" money="" will="" be="" 2%="" lower.="" the="" real="" demand="" for="" money="" will="" be="" 2%="" higher.="" i =" 0." 06="" 245="" 500="" 255="" 250="" d:="" asset="" market="" equilibrium="" question="" 18="" in="" year="" 1,="" income="" is="" ,="" the="" money="" supply="" is="" and="" the="" price="" level="" is="" .="" what="" is="" the="" equilibrium="" nominal="" interest="" rate?="" question="" 19="" what="" is="" "velocity"="" in="" this="" equilibrium="" question="" 20="" in="" year="" 2,="" the="" price="" level="" rises="" to="" .="" assuming="" and="" remain="" unchanged.="" what="" are="" the="" nominal="" interest="" rate="" and="" velocity="" in="" year="" 2?="" question="" 21="" suppose="" now="" the="" central="" bank="" sets="" the="" nominal="" money="" supply="" depending="" according="" to="" a="" "policy="" rule"="" which="" depends="" on="" income="" and="" the="" price="" level:="" for="" questions="" 18‐22,="" assume="" that="" the="" real="" money="" demand="" function="" is="" given="" by="" where="" denotes="" the="" price="" level,="" denotes="" aggregate="" income="" and="" represents="" the="" nominal="" interest="" rate.="640" +="" 0.1y="" −="" 5000i="" m="" d="" p="" p="" y="" i="" y="1000" m="980" p="2" 0.10="" 0.05="" 0.06="" 0.01="" 2.27="" 2.04="" 0.44="" 0.49="" p="2." 23="" y="" m="" i="7.5%;" v="2.04" i="5.5%;" v="2.23" i="6%;" v="2.27" i="3%;" v="1.31" if="" the="" price="" level="" increases="" from="" 2="" in="" year="" 1="" to="" 2.23="" in="" year="" 2,="" how="" does="" the="" nominal="" interest="" rate="" change="" in="" this="" case?="" question="" 22="" if="" the="" expected="" inflation="" rate="" equals="" the="" actual="" inflation="" rate="" between="" years="" 1="" and="" 2,="" what="" is="" the="" real="" interest="" rate="" in="" year="" 1?="" e:="" variable="" vs.="" fixed="" mortgage="" rates="" question="" 23="" why="" do="" you="" think="" mclister="" believes="" that="" mortgage="" "rate="" risk="" has="" risen="" meaningfully"?="" what="" do="" you="" think="" he="" means="" when="" he="" says="" that="" "the="" bond="" market="" concurs"?="" question="" 24="" why="" do="" you="" think="" it="" might="" be="" the="" case="" that="" "if="" the="" central="" bank="" acts="" too="" late,="" short="" term="" price="" pressures="" can="" become="" long="" term="" price="" pressures"?="" question="" 25="" what="" does="" mclister="" mean="" when="" he="" says="" simulations="" show="" "a="" four‐="" or="" five‐="" year="" fixed="" easily="" outperforming="" a="" floating="" rate="" mortgage"?="" if="" this="" is="" true,="" how="" do="" you="" think="" people="" will="" try="" to="" adjust="" their="" mortgages?="" m="1100" +="" 0.1y="" –="" 110p="" .="" from="" 5%="" to="" 6.13%="" from="" 5%="" to="" 4.55%="" from="" 5%="" to="" 6.24%="" from="" 6%="" to="" 5%="" 5%="" 11.5%="" 6.24%="" ‐6.5%="" please="" the="" read="" following="" opinion="" piece="" by="" robert="" mclister="" in="" the="" globe="" and="" mail,="" report="" on="" business="" (oct.="" 28,="" 2021)="" and="" answer="" questions="" 23‐25:="" "with="" higher="" interest="" rates="" ahead,="" it="" is="" likely="" time="" to="" lock="" in="" your="" mortgage".="" https://onq.queensu.ca/content/enforced/571847-econ222002f21/assignments/mortgagerates.pdf="" https://onq.queensu.ca/content/enforced/571847-econ222002f21/assignments/mortgagerates.pdf="" 3610020801-eng="" multifactor="" productivity,="" value-added,="" capital="" input="" and="" labour="" input="" in="" the="" aggregate="" business="" sector="" and="" major="" sub-sectors,="" by="" industry="" frequency: annual="" table:="" 36-10-0208-01="" (formerly="" cansim 383-0021)="" release="" date:="" 2021-04-19="" geography:="" canada="" canada="" real="" gross="" domestic="" product="" (gdp)="" 2="" labour="" input="" 3="" capital="" input="" 4="" gross="" domestic="" product="" (gdp)="" 5="" labour="" compensation="" 6="" reference="" period="" business="" sector="" 1="" business="" sector="" 1="" business="" sector="" 1="" business="" sector="" 1="" business="" sector="" 1="" index,="" 2012="100" dollars="" 1961="" 17.19="" 32.472="" 11.362="" 30,699.91="" 19,065.78="" 1962="" 18.512="" 33.928="" 11.808="" 33,135.19="" 20,619.66="" 1963="" 19.582="" 34.841="" 12.295="" 35,575.16="" 21,779.05="" 1964="" 21.01="" 36.424="" 12.988="" 38,864.97="" 23,604.87="" 1965="" 22.469="" 38.1="" 13.874="" 42,921.90="" 26,276.51="" 1966="" 23.986="" 40.07="" 15.021="" 47,881.74="" 29,433.05="" 1967="" 24.501="" 40.879="" 16.167="" 50,617.00="" 31,831.84="" 1968="" 25.888="" 41.11="" 16.878="" 55,012.70="" 33,946.07="" 1969="" 27.213="" 42.108="" 17.728="" 59,925.31="" 37,386.48="" 1970="" 28.017="" 42.226="" 18.559="" 63,876.21="" 39,776.40="" 1971="" 29.106="" 43.139="" 19.353="" 69,493.96="" 43,396.00="" 1972="" 30.852="" 44.509="" 20.366="" 77,422.68="" 48,334.22="" 1973="" 33.128="" 47.119="" 21.723="" 92,225.30="" 55,815.69="" 1974="" 34.254="" 48.771="" 23.243="" 110,395.62="" 66,590.50="" 1975="" 34.7="" 48.664="" 24.525="" 125,568.22="" 76,523.03="" 1976="" 37.015="" 48.629="" 26.306="" 142,923.76="" 87,730.28="" 1977="" 38.609="" 49.143="" 27.499="" 157,098.79="" 96,923.59="" 1978="" 40.351="" 51.236="" 28.595="" 174,949.94="" 105,310.88="" 1979="" 42.08="" 54.148="" 30.264="" 203,009.27="" 119,059.04="" 1980="" 43.112="" 55.907="" 32.328="" 230,418.82="" 134,729.63="" 1981="" 45.031="" 57.452="" 34.364="" 258,996.63="" 154,651.07="" 1982="" 43.277="" 54.339="" 35.014="" 266,695.75="" 161,638.38="" 1983="" 44.523="" 54.557="" 35.75="" 290,796.38="" 168,757.70="" 1984="" 47.596="" 56.776="" 36.787="" 320,438.72="" 182,768.45="" 1985="" 50.256="" 59.08="" 38.281="" 347,785.37="" 199,774.47="" 1986="" 51.565="" 61.798="" 39.521="" 362,537.54="" 212,649.10="" 1987="" 54.112="" 64.692="" 41.35="" 396,357.38="" 232,758.83="" 1988="" 56.88="" 67.486="" 43.785="" 435,194.02="" 257,725.55="" 1989="" 58.399="" 69.253="" 46.166="" 462,216.24="" 277,936.30="" 1990="" 58.148="" 69.342="" 47.558="" 472,034.85="" 289,981.14="" 1991="" 55.808="" 67.046="" 48.636="" 464,264.68="" 293,777.02="" 1992="" 56.131="" 66.301="" 49.462="" 468,528.03="" 297,923.44="" 1993="" 57.793="" 67.821="" 50.181="" 487,398.87="">