In addition to liberalizing its economy under the Reform and Opening
Up policies of Deng Xiaoping, China also experienced a profound change in its demographic patterns in part
driven by the imposition of the One Child policy. In this section, we adjust the model from question 2 to
account for these demographic changes.
(a) (5 points) In sheet 3, construct an alternative path for Chinese population (column B, rows 15 to 110)
as follows. For 1955 to 2019, use the population growth data from Penn World tables. Then, from 2019
to 2050, assume a constant growth rate of -1% (n = -0.01). Based on the Penn World tables data what
was the average growth rate of China’s population each of the 20-year periods 1955-1975, 1975-1995,
and 1995-2015? (Note: columns C, D, E, and F should update automatically when you fill in column
B).
(b) (5 points) Construct the deduced variables in columns G through M using the new path for population
growth. How does the new path for population growth affect the growth rate of total output? What
about the growth rate of output per worker? For both variables, is there a permanent (i.e. on the
balanced growth path) effect to the growth rate from this change in population growth?
(c) (10 points) Using the growth accounting procedure, what is the contribution of capital, labor, and
technology growth to Chinese growth in questions 2 and 3. Please fill in these values in columns O, P,
and Q for sheets 2a and 3. Explain the differences