Problem 1. Per Capita GDP in Six Countries. The le pwt90.xlsx posted on Blackboard
contains version 9.0 of the \Penn World Table” database. Use the le to extract the data
for the following six countries: United States, United Kingdom, Japan, Brazil, China, and
Ethiopia. Specically, we are interested in two series: \rgdpe” for PPP-adjusted chain-
weighted GDP (in millions of 2011 dollars) and \pop” for population size (in millions). Use
the template le problem1.xlsx provided on Blackboard to place the relevant data and
generate per capita real GDP series for our six countries of interest.

1. Plot the resulting per capita real GDP series for the six countries over the time period
1960{2014 (on the same graph) on the standard scale and, separately, on a ratio scale
of your choice. Hint: to make a plot on a ratio scale in Excel rst use the standard
scale, then right-click on the vertical axis, choose \Format Axis” and under the axis
options tab select logarithmic scale indicating a base of your choice (say, 3). To plot
all six trajectories on the same graph, select the six series and insert the line graph
based on your selection. Feel free to play around with the graph options to make them
look nice.
2. For each country, compute the average annual growth rate of real per capita GDP over
the time period 1960{2014.

Problem 2. (Midterm exam, Spring 2014). At the beginning of 2003, Mr. Pu, the president
of country Ru, set an ambitious goal: Ru’s real GDP must be doubled in 10 years, by 2013.
In 2003, Ru’s real GDP was equal to 20.

1. At what rate (let’s call it the \target” rate) did the economy of Ru have to grow in
order to achieve Mr. Pu’s goal? How long would it take for the economy of Ru to
double if it grew at 5% per year? Hint: use the rule of 70.
2. The economy of Ru was o to a good start and was growing at the target rate for 5
years, from 2003 until 2008, when the world economic crisis arrived. As a result of
the crisis, in 2008 and 2009 real GDP was growing at just 1% per year. Furthermore,
following the two crisis years the economy could only sustain the annual growth rate
of 2%. Write down the formula to calculate the level of Ru’s real GDP in 2013. Hint:
use the constant growth rule repeatedly. In case you are curious, if you evaluate that
formula, the answer will be roughly 30.

SAMPLE ASSIGNMENT

Sample-2