ECON7040 – Tutorial 1 answer guide
1. Open the textbook https://www3.nd.edu/~esims1/GLS_may_2021.pdf
Do exercise 2, page 71-72. Note: population data are from WDI.
a)
With the exception of Japan, there isn’t any obvious convergence.
b) There is definitely convergence. Germany, Japan, and Spain start off with lower levels of
income per capita and subsequently close the gap.
0.00000
0.05000
0.10000
0.15000
0.20000
0.25000
0.30000
0.35000
19
5
0-
01
-0
1
19
5
4-
01
-0
1
19
5
8-
01
-0
1
19
6
2-
01
-0
1
19
6
6-
01
-0
1
19
7
0-
01
-0
1
19
7
4-
01
-0
1
19
7
8-
01
-0
1
19
8
2-
01
-0
1
19
8
6-
01
-0
1
19
9
0-
01
-0
1
19
9
4-
01
-0
1
19
9
8-
01
-0
1
20
0
2-
01
-0
1
20
0
6-
01
-0
1
20
1
0-
01
-0
1
20
1
4-
01
-0
1
20
1
8-
01
-0
1
Share of government spending
AUSTRALIA CANADA GERMANY SPAIN JAPAN USA
0
2
4
6
8
10
12
19
6
0-
01
-0
1
19
6
3-
01
-0
1
19
6
6-
01
-0
1
19
6
9-
01
-0
1
19
7
2-
01
-0
1
19
7
5-
01
-0
1
19
7
8-
01
-0
1
19
8
1-
01
-0
1
19
8
4-
01
-0
1
19
8
7-
01
-0
1
19
9
0-
01
-0
1
19
9
3-
01
-0
1
19
9
6-
01
-0
1
19
9
9-
01
-0
1
20
0
2-
01
-0
1
20
0
5-
01
-0
1
20
0
8-
01
-0
1
20
1
1-
01
-0
1
20
1
4-
01
-0
1
20
1
7-
01
-0
1
LogRGDP per capita
AUSTRALIA CANADA GERMANY SPAIN JAPAN USA
c)
Normally in macroeconomics, GDP growth can be computed by the first difference of the
natural log(GDP).
Growtht= log(GDPt) – log(GDPt-1)
Compute correlation between 2 series: GDP per capita growth at time t and government
spending as a share of GDP at time t-1.
Correlation is 0.076. these variables are almost uncorrelated.
2. Download data from Maddison project
https://www.rug.nl/ggdc/historicaldevelopment/maddison/releases/maddison-project-
database-2020
Replicate the diagram GDP per capita – selected countries in Lecture note, slide 19, select 4
countries and time period of your own interest. Analyse the diagram.
You can use Excel or Stata, R… to do this question.
Refer to Stata do file to draw your diagram using Stata. You can use other software as well.
0
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
0.09
0.1
0 0.05 0.1 0.15 0.2
Real GDP growth and government share