Provide True/False answers to the following statements. Where false, explain why the statement is false. 1. World economic growth has continued in the last forty years despite the experiences of China and India. 2. Growth in GDP per capita in a country necessarily implies an alleviation of poverty.
Provide True/False answers to the following statements. Where false, explain why the statement is false. 1. World economic growth has continued in the last forty years despite the experiences of China and India. 2. Growth in GDP per capita in a country necessarily implies an alleviation of poverty.
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By manipulating the equations of the Solow model mathematically, it is possible to make more precise quantitative statements about the behavior of growth rates over time. For example, one way of qualifying the principle of transition dynamics is with the following equation.
g = 3 X (ln y* - ln y0) + 2
where g denotes the growth rate of a country over the next 10 years (in percentage points), 1n denotes the natural logarithm, y0 is the per capita GDP of a country in a steady-state (relative to the United States).
Of course, we don't usually know a country's steady-state position vis-Ã -vis of the United States. However, we do observe its growth rate. This question asks you to consider the facts from recent growth experiences in the table below.
| Country | Current rate | Steady-state | g |
| United States | 100 | 2 | |
| Ireland | 86 | 4 | |
| Russia | 21 | 5 | |
| Brazil | 17 | 2 | |
| China | 7 | 9 | |
| India | 5 | 6 | |
| Ethiopia | 1 | 5 |
Per capita Growth rate Per capita
GDP (US = 100), during GDP (US = 100),
Country 2010 2000-2010(%) steady state
The United States 100 2.0
Ireland 86 4.0
Russia 21 5.0
Brazil 17 2.0
China 7 9.0
India 5 6.0
Ethiopia 1 5.0
(a) Using those facts and the equation above, fill in the last column of the table. That is, offer a projection of where countries are headed in the long run.
(b) Provide a one-paragraph discussion of your results.
