Solved

The Neoclassical Growth Model Predicts That for Identical Savings Rates

Question 9

Essay

The neoclassical growth model predicts that for identical savings rates and population growth rates,countries should converge to the per capita income level.This is referred to as the convergence hypothesis.One way to test for the presence of convergence is to compare the growth rates over time to the initial starting level,i.e. ,to run the regression The neoclassical growth model predicts that for identical savings rates and population growth rates,countries should converge to the per capita income level.This is referred to as the convergence hypothesis.One way to test for the presence of convergence is to compare the growth rates over time to the initial starting level,i.e. ,to run the regression = + × RelProd60 ,where g6090 is the average annual growth rate of GDP per worker for the 1960-1990 sample period,and RelProd60 is GDP per worker relative to the United States in 1960.Under the null hypothesis of no convergence,β1 = 0;H1 : β1 < 0,implying ( beta )convergence.Using a standard regression package,you get the following output: Dependent Variable: G6090 Method: Least Squares Date: 07/11/06 Time: 05:46 Sample: 1 104 Included observations: 104 White Heteroskedasticity-Consistent Standard Errors & Covariance You are delighted to see that this program has already calculated p-values for you.However,a peer of yours points out that the correct p-value should be 0.4562.Who is right? = The neoclassical growth model predicts that for identical savings rates and population growth rates,countries should converge to the per capita income level.This is referred to as the convergence hypothesis.One way to test for the presence of convergence is to compare the growth rates over time to the initial starting level,i.e. ,to run the regression = + × RelProd60 ,where g6090 is the average annual growth rate of GDP per worker for the 1960-1990 sample period,and RelProd60 is GDP per worker relative to the United States in 1960.Under the null hypothesis of no convergence,β1 = 0;H1 : β1 < 0,implying ( beta )convergence.Using a standard regression package,you get the following output: Dependent Variable: G6090 Method: Least Squares Date: 07/11/06 Time: 05:46 Sample: 1 104 Included observations: 104 White Heteroskedasticity-Consistent Standard Errors & Covariance You are delighted to see that this program has already calculated p-values for you.However,a peer of yours points out that the correct p-value should be 0.4562.Who is right? + The neoclassical growth model predicts that for identical savings rates and population growth rates,countries should converge to the per capita income level.This is referred to as the convergence hypothesis.One way to test for the presence of convergence is to compare the growth rates over time to the initial starting level,i.e. ,to run the regression = + × RelProd60 ,where g6090 is the average annual growth rate of GDP per worker for the 1960-1990 sample period,and RelProd60 is GDP per worker relative to the United States in 1960.Under the null hypothesis of no convergence,β1 = 0;H1 : β1 < 0,implying ( beta )convergence.Using a standard regression package,you get the following output: Dependent Variable: G6090 Method: Least Squares Date: 07/11/06 Time: 05:46 Sample: 1 104 Included observations: 104 White Heteroskedasticity-Consistent Standard Errors & Covariance You are delighted to see that this program has already calculated p-values for you.However,a peer of yours points out that the correct p-value should be 0.4562.Who is right? × RelProd60 ,where g6090 is the average annual growth rate of GDP per worker for the 1960-1990 sample period,and RelProd60 is GDP per worker relative to the United States in 1960.Under the null hypothesis of no convergence,β1 = 0;H1 : β1 < 0,implying ("beta")convergence.Using a standard regression package,you get the following output:
Dependent Variable: G6090
Method: Least Squares
Date: 07/11/06 Time: 05:46
Sample: 1 104
Included observations: 104
White Heteroskedasticity-Consistent Standard Errors & Covariance The neoclassical growth model predicts that for identical savings rates and population growth rates,countries should converge to the per capita income level.This is referred to as the convergence hypothesis.One way to test for the presence of convergence is to compare the growth rates over time to the initial starting level,i.e. ,to run the regression = + × RelProd60 ,where g6090 is the average annual growth rate of GDP per worker for the 1960-1990 sample period,and RelProd60 is GDP per worker relative to the United States in 1960.Under the null hypothesis of no convergence,β1 = 0;H1 : β1 < 0,implying ( beta )convergence.Using a standard regression package,you get the following output: Dependent Variable: G6090 Method: Least Squares Date: 07/11/06 Time: 05:46 Sample: 1 104 Included observations: 104 White Heteroskedasticity-Consistent Standard Errors & Covariance You are delighted to see that this program has already calculated p-values for you.However,a peer of yours points out that the correct p-value should be 0.4562.Who is right? The neoclassical growth model predicts that for identical savings rates and population growth rates,countries should converge to the per capita income level.This is referred to as the convergence hypothesis.One way to test for the presence of convergence is to compare the growth rates over time to the initial starting level,i.e. ,to run the regression = + × RelProd60 ,where g6090 is the average annual growth rate of GDP per worker for the 1960-1990 sample period,and RelProd60 is GDP per worker relative to the United States in 1960.Under the null hypothesis of no convergence,β1 = 0;H1 : β1 < 0,implying ( beta )convergence.Using a standard regression package,you get the following output: Dependent Variable: G6090 Method: Least Squares Date: 07/11/06 Time: 05:46 Sample: 1 104 Included observations: 104 White Heteroskedasticity-Consistent Standard Errors & Covariance You are delighted to see that this program has already calculated p-values for you.However,a peer of yours points out that the correct p-value should be 0.4562.Who is right? You are delighted to see that this program has already calculated p-values for you.However,a peer of yours points out that the correct p-value should be 0.4562.Who is right?

Correct Answer:

verifed

Verified

Statistical packages typically do not kn...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q4: You have collected data for the 50

Q5: The p-value for a one-sided left-tail test

Q6: Your textbook discussed the regression model when

Q7: Using the textbook example of 420 California

Q8: (Continuation of the Purchasing Power Parity question

Q11: (continuation from Chapter 4,number 3)You have obtained

Q13: The error term is homoskedastic if<br>A)var(ui <img

Q14: (Continuation from Chapter 4)Sir Francis Galton,a cousin

Q55: The t-statistic is calculated by dividing<br>A)the OLS

Q58: The effect of decreasing the student-teacher ratio