Impact of Technology on GDP Growth Paper
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Impact of Technology on GDP Growth Paper
Economic Growth Discussion
Requirement 1: What is more appropriate to help stimulate economic growth; consumption or investment demand? What sector do you think our economy should look at stimulating, consumers or businesses? Explain your reasoning using the concepts of aggregate demand and supply.
Requirement 2: Explain a positive and negative externality that you have recently consumed. Please relate your answer to the characteristics of elasticity. Why does the government have to get involved when an externality is present in the market?
Impact of Technology on GDP Growth Paper
Introduction
In this Module we constructed our first macroeconomic model based on microeconomic foundations! This one-period, representative agent model is a simplified representation of how the economy works as we thread households labor-leisure decisions to firms’ production decisions and to the government’s spending (mindful of its balance, such that taxes are always enough to fund spending, that is, there are no deficits or surpluses. The model provides a common framework in which the goods market is tied to the labor market pinning down wages, employment and the production and allocation of goods in the economy (i.e. the economy’s equilibrium).
But something that we used and introduced since the last Module is technology as part of the production function Y=zF(N,K). That ‘z’ is something special.
Enter the Solow residual. As discussed in the Module, we (think) we know what technology is, but it is not as obvious and measurable as workers and machines are. It was Robert Solow (Nobel Prize recipient) who realized that if you can count output, labor, and capital, you can “back out” technology!
Instructions
The purpose of this exercise is to document the parallel in output growth and technological progress.
Get the following series from the St. Louis Federal Reserve Bank FRED database from January 1954 to December 2017:
– Real Gross Domestic Product (GDPC1)
We are going to do the following transformations to our quarterly GDP series, which is in billions of (real) 2012 dollars to make it comparable to Solow’s technology series which is an annual index set equal to 1 in the year 2011; go to EDIT GRAPH and:
+ Units (dropdown): Index (Scale value to 100 for chosen date) set to 2011-01-01.
+ Modify frequency (dropdown): set to Annual.
+ Customize data (dropdown): Set Formula: a/100 and click on Apply. This transform the Index from 100 to 1, which is the base value of the Solow residual set to the year 2011 as you will see.
Next, create a separate graph for:
– Total Factor Productivity (RTFPNAUSA632NRUG)
Your work has to have:
– Introduction (what is the question that you are addressing, for example, what is the importance of technological advances in GDP growth? —25 points)
– Narrative (a description of how you are addressing it —50 points)
– Conclusion (what do you learn from the exercise and also ties together the two parts above —25 points)
RUBRIC
Excellent Quality
95-100%
Introduction 45-41 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Literature Support
91-84 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Methodology
58-53 points
Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score
50-85%
40-38 points
More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.
83-76 points
Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.
52-49 points
Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality
0-45%
37-1 points
The background and/or significance are missing. No search history information is provided.
75-1 points
Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.
48-1 points
There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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Impact of Technology on GDP Growth Paper