solow
EC2220 Week 4 Baxter Robinson Growth Accounting Assignment Due: 6:00 PM ET Friday October 1st, 2021 1 Purpose The main goal of economics is to understand the economic world around us. To do so, economists typically write models about how they think the world works and then test those models against data. This assignment will help you develop these skills. In order to complete this assignment, you will need to download some data, perform some calculations using that data, create several graphs, and then write up a short essay comparing what you found in the data to a model we have studied. 2 Submission Instructions You must upload your assignment to OWL: A single typed PDF containing both the graphs and the essay The assignment is due at 6:00 PM ET on Friday October 1st. A late penalty of 10% per 24-hour period (including weekends) will apply. 3 Data We will use the following variables from the Penn World Tables: rgdpna: Real GDP at constant 2011 national prices pop: Population (in millions). emp: Number of workers (in millions). rnna: Capital stock at constant 2011 national prices (in mil. 2011US$). We will study the period from 1956-2016. Download the above variables for two countries. Everyone is required to study Canada as the first country. The second country can be any country you are interested in studying. The only requirement is that it must have all four variables (rgpna, pop, emp, and rnna) available for the years 1956-2016. You can download the Penn World Tables Version 9.1 data from: https://www.rug.nl/ggdc/productivity/pwt/ 1 https://www.rug.nl/ggdc/productivity/pwt/ EC2220 Week 4 Baxter Robinson 4 Software It is your choice whether to use Excel, Stata, or R to create your graphs. If you have no experience with creating graphs, it will be fastest to learn to create graphs in Excel. If you expect to take more higher level economics classes, have any interest in working with data in the future, or want to gain a skill that is highly valued in both graduate school and in the labour market, I strongly encourage you to take some time to learn the basics of Stata or R. Both of these are simple programming languages that are easy to use and very helpful for analyzing data. Learning the basics will help you a lot later on in your degree and likely in your career. Excel: – As a UWO student, you are eligible to download and install Microsoft Office (which contains Excel) onto your computer – See instructions for how to do so at this link: https://wts.uwo.ca/sitelicense/microsoft/homeuse.html Stata: – As a student in this class, you are eligible to use a Stata licence virtually through MyVLab – See instructions for how to do so at this link: https://myvlab.uwo.ca/ – To get started with Stata try the following tutorial: https://data.princeton.edu/stata/ – If you are on campus, you can also access Stata on the computers in SSC 1020. The SSC 1020 room is available by card access, Monday-Friday 7 AM - 7 PM. R: – R is open-source software (free to use) – You will likely want to download RStudio: https://rstudio.com/ – To get started with R try the “Programming with R” tutorial: https://software-carpentry.org/lessons/ 5 Graphs For each of the following variables, plot one graph contrasting Canada’s values with the other country that you chose over time: 1. Real GDP 2. Real GDP per capita 2 https://wts.uwo.ca/sitelicense/microsoft/homeuse.html https://myvlab.uwo.ca/ https://data.princeton.edu/stata/ https://rstudio.com/ https://software-carpentry.org/lessons/ EC2220 Week 4 Baxter Robinson 3. Real GDP per worker 4. Natural logarithm of Real GDP 5. Natural logarithm of Real GDP per capita 6. Capital per worker 7. Total Factor Productivity as measured by the Solow Residual assuming that α = 0.3 8. Total Factor Productivity as measured by the Solow Residual assuming that α = 0.4 Remember that you can calculate the Solow Residual, assuming a Cobb-Douglas production function, for a country using the formula: Y = ẑKαN1−α Key Tips for Good Graphs Title each graph Label both the x and y-axes Zoom in on the variation you want to showcase Comparable graphs must have the same domain and range Rule of Thumb: Maximum 4 lines per graph Multiple lines should differ in BOTH colour and style Graphs should be self-explanatory – Use clear labels, not acronyms or variable names – Title should fully describe the contents of the graph without reading the rest of the assignment Choose appropriate units – Do not write “100000000” – Use commas “100,000,000” – Or better change the units “100 million” 3 EC2220 Week 4 Baxter Robinson 6 Essay After making the above graphs, write a short essay answering the following question: Does the Solow model do a good job at explaining the economic growth experienced by your two countries? Your essay must take a clear position on the above question. The essay must: Be between 500-750 words Clearly state the word count at the top of the essay Be typed, double-spaced and have a font size of at least 12 points Be submitted as a PDF How to Structure Your Assignment: The introduction should briefly introduce the essay, provide a clear thesis statement that summarizes the main position of the essay, and then outline the main points that will be considered. There should be between 1 and 4 body paragraphs which clearly argue your position on the question. There should be a brief conclusion the summarizes the key points of the essay. Any references you cite should be identified and listed at the end of the paper. They do not count toward the word limit. – You do not need to consult additional references. – If you consult additional references to learn more about the country you are studying, you must cite them according to a recognized academic style (e.g. APA, Chicago-Author Date, etc..) – You do not need to cite the textbook or the video lectures if you use it. Key Tips for Good Writing Don’t try to write it perfectly the first time, instead break the writing process into many easy steps Use simple clear language Avoid metaphors, flowery speech and complicated words Keep your sentences short 4 EC2220 Week 4 Baxter Robinson Put one main idea in each paragraphs Make your main points clear up front Support each point with evidence Avoid using math 5 Purpose Submission Instructions Data Software Graphs Essay