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1. Empirically, growth rate is computed using per capita Gross Domestic Products (GDPpc) data.
(only need to answer the second question)
1) How is GDP defined? What are some of its weaknesses even as a measure of monetary welfare? Yet why it remains the most popular growth indicator?

2) Given the following growth rates data from country A during 2000~2015, please determine its average annual rate of growth in per capita real GDP.
Total GDP in 2000 (in current LCU) 1 trillion
Total GDP in 2015 (in current LCU) 2.5 trillion
Inflation during 2000-2015 grew at 4% per year
Population during this period grew at 1% per year

3) The following graph plots GDPpc at constant US$ (2011=100) by developing region for the period of 1965-2015. How does it support the “universal convergence hypothesis”? (A complete answer should include an explanation of the hypothesis).

2. The following is income data collected from country A in 2014.
Individual No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Income 200 180 400 120 350 120 220 300 90 270 110 170 160 150 80

Assume the poverty line is 120, please use these data to determine the following:
1) What is the poverty headcount ratio for country A in year 2014?
2) What is its poverty gap? And the minimum cost to eradicate poverty in country A?
3) What is country A’s poverty severity index?
4) Suppose country B, A’s neighboring country, has a poverty severity index of 0.02. What would you say about the poor in A as compared to their counterparts in B?

3. Poverty measures in the FGT family (Foster, Greer, and Thorbecke 1984) — namely the poverty headcount ratio (P0), the poverty gap index (P1), and the poverty severity index (P2) — are additively decomposable, which allows us to see how poverty within different population subgroups contribute to the overall poverty. The following table, for example, is from Morley (1995) for Buenos Aires (the capital city of Argentina) in 1980 and 1989.

1) Fill in the blanks.
2) According to the data, how did overall poverty in the city change during 1980-9?
3) Can you decompose the aggregate change in the headcount ratio (∆P0) to see how it came from changes internal to each group, changes in the relative size of each group, and their cross effects?

4. Please plot the Lorenz Curve and determine the value of Gini coefficient using income data listed below.
ID 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Income 100 200 220 310 500 700 800 1100 1400 1450 1500 1500 1525 2500 5000

5. In an effort to study whether the international distribution of income has become more or less unequal over time,
1) Economists measure it by two concepts that Bourguignon and Morrison (2002) referred to as “Concept 1” and “Concept 2”. Can you explain how these two concepts differ?
2) Milanovic (2009)’s study gave the following graph. There is an interesting contrast between Gini concept 2 and Gini concept 2 without China and Gini concept 1. How is the contrast explained?

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