Download Document

Regular Homework 3
Economics 2000
Assigned Tuesday, October 15th , 2013
Due: Tuesday, October 22nd , 2013
1. Investment is the largest category of expenditure for China. What fraction of growth
is being driven by investment in China? Calculate the contribution of Gross Fixed
Capital Formation (another name for investment) to growth in China over the last
decade. Data on the dollar value vtk of gross fixed capital formation from 2001 to
2012 is available in table 1 along with the inflation vector for investment, ptk ptk1 ,
for 2001-2012.
k=Gross Fixed Capital Formation
vtk
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
3,775,450,000,000
4,363,210,000,000
5,349,070,000,000
6,511,770,000,000
7,423,290,000,000
8,795,410,000,000
10,394,860,000,000
12,808,440,000,000
15,667,979,284,579
18,361,516,223,000
21,520,000,000,000
ptk ptk1
qtk qtk1
gtq
GFCF
%
vtk Vt
gtRe alGDP
wtk1 gtq
1.023
1.054
1.086
1.019
1.050
1.042
1.124
0.983
1.048
1.086
Average
a. Use the data in Table 1 to calculate the gross growth rate of the quantity of gross
fixed capital formation (fixed investment) qtk qtk1 , for China for the years
2002-2011. Calculate the net growth rat in percentage terms,
g
qGFCF
t
qtGFCF  qtGFCF
1
%
100% and calculate the average for the years 2002-2011.
qtGFCF
1
b. Get data from the United Nations National Accounts Database (Link). Under Data
Selection: Basic Data Selection. Select Step 1 Countries) China, People’s Republic
of for dollar expenditure. Step 2 Series) GDP by Expenditure, Percentage Distribution
(Shares) and Step 3 Years) 2001-2010. Divide GFCF as a percentage of GDP by
100 to get wtk  vtk Vt . Multiply gtq
GFCF
% by wtk to get GDP growth caused by
k
investment spending. Calculate the average for years 2002-2011.
c. Get data from the same source on GDP, Annual Rate of Growth – Percentage for the
years 2002-2011. Calculate the average. On average what fraction of China’s GDP
growth is driven by investment growth?
2. The following table reports data on the salary of locally trained petroleum engineers
in a number of Asian economies for 2011. These have been converted into US$ using
exchange rates. Compare the purchasing power of these salaries. Get data on
exchange rates and PPP conversion factors from the World Bank World Development
Indicators: 1) Go to the Databank; 2) Select the appropriate countries; 3) Go to
Series and select Financial Sector Exchange Rates and Prices and select DEC alternative
conversion factor (LCU per US$)
(S); From
Economic Policy & Debt
Purchasing Power Parity
and select PPP conversion factor GDP (LCU per International $). Choose 2011.
China
India
Indonesia
Malaysia
Philippines
Singapore
South Korea
Thailand
Vietnam
US$ Salary
$68,300
$38,900
$45,200
$47,200
$35,600
$84,900
$81,400
$49,400
$53,300
S
PPP
Local
Currency
Purchasing
Power
Convert those salaries back into local currency terms by multiplying by the exchange rate.
Convert back into local purchasing power by dividing by PPP. Calculate where petroleum
engineers have the most purchasing power.
3. GINI Coefficient for Planet Earth
Measure changes in Global Income Distribution by calculating a GINI coefficient for
the world economy. Go to World Bank World Development Indicators Databank.
From Country select Aggregates and then select High Income, Upper Middle
Income, Lower Middle Income, and Low Income countries. From Economic Policy &
select GDP per capita, PPP (constant 2005 international $) and
GDP, PPP (constant 2005 international $). Choose 1990 and 2012 and Download to
Excel.
a. In each year, calculate the total population in each group as the ratio of
GDP(Intl$)/GDP per Capita. Calculate the share of the world’s population
that falls in each group.
Debt
Purchasing Power Parity
b. Sum up the total GDP(Intl$). Calculate the share of the world’s GDP that
goes to each of the four groups.
c. Calculate a Lorenz curve for world Income. What fraction goes to the lowest
percentile (i.e. Low Income countries)? What fraction goes to the lowest two
groups (i.e Low Income and Lower Middle Income countries)? What fraction
goes to the lowest three groups (i.e Low Income, Lower Middle Income, and
Upper Middle Income countries)?
d. Use the Lorenz curve to construct four trapezoids. Use the share of
population in each group as the width of the trapezoid. Calculate the area of
each trapezoid. Sum the area of the trapezoids
e. Calculate the World GINI coefficient for 1990 and 2012.
1990
Group
0
Low income
1
Lower middle income
2
Upper middle income
3
High income
4
Share of
Poplulation
Share of Lorenz
Income Curve
Trapezoid
Area
0
1
Sum
2012
Group
0
Low income
1
Lower middle income
2
Upper middle income
3
High income
4
Share of
Poplulation
Share of Lorenz
Income Curve
Trapezoid
Area
0
1
Sum