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Homework Example

Homework Example . Column 3 and 4. Simple Ratios: Column 3: k A / k US $35,185/$135,877 = .2589 Column 4: y A / y US $15,275/$42,887 = .3561. Column 5. Assume A= 1 for simplicity

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Homework Example

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  1. Homework Example

  2. Column 3 and 4 • Simple Ratios: • Column 3: kA/kUS $35,185/$135,877 = .2589 • Column 4: yA/yUS $15,275/$42,887 = .3561

  3. Column 5 • Assume A= 1 for simplicity • A can equal anything as long as it is the same for both the US and the other country, but using A=1 is necessary for later. • yUS*=(1)kUS1/3 • $51.41=$135,8771/3 • yA*=(1)kA1/3 • $32.76=$35,1681/3 • Relative: • yA*/yUS* = $32.76/51.51=.637

  4. Column 6 • y = actual output per person (column 2) • y* = predicted output per person (y*=k1/3) • y = Ay* • y/y* = A • Yus/yus*= 42,887/51.41 = 834.21 • yA/yA*= 15,275/32.767 = 466.166 • Relative: • AA/AUS= 466.166/834.21 = 0.559

  5. Final Answer

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