Table 3.8 gives data on gross domestic product (GDP) for the United States for the years 1959-1997.1. Plot the GDP data in current and constant (i.e., 1992) dollars against time.2. Letting Y denote GDP and X time (measured chronologically starting with 1 for 1959, 2 for 1960, through 39 for 1997), see if the following model fits the GDP data:Yt = β1 + β2 Xt + utEstimate this model for both current and constant-dollar GDP.3. How would you interpret β2?4. If there is a difference between β2 estimated for current-dollar GDP and that estimated for constant-dollar GDP, what explains the difference?5. From your results what can you say about the nature of inflation in the United States over the sample period? TABLE 3.8 NOMINAL AND REAL GDP, UNITED STATES, 1959-1997YearNGDPRGDPYearNGDPRGDP4630.6004615.0001959507.20002210.20019792557.5001960526.60002262.90019802784.2004720.7004620.3001961544.80002314.30019813115.9001962585.20002454.80019823242.1001963617.40002559.40019833514.5004803.7001964663.00002708.400198419853902.4005140.1001965719.10002881.1004180.7005323.5001966787.70003069.20019864422.2005487.7001967833.60003147.20019874692.3005649.5001968910.60003293.90019885049.6005865.2001969982.20003393.60019895438.7006062.000197019711035.6003397.60019905743.8006136.3001125.4003510.00019915916.7006079.4001972197319741237.3003702.30019926244.4006244.4001382.6001496.9001630.6003916.30019936558.1006389.6003891.20019946947.0006610.70019753873.90019957269.6006761.700197619771819.0004082.90019967661.6006994.8002026.9004273.60019978110.9007269.80019782291.4004503.000

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Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter11: Gross Domestic Product

Section: Chapter Questions

Problem 4SQ

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Question

Table 3.8 gives data on gross domestic product (GDP) for the United States for the years 1959-1997.

1. Plot the GDP data in current and constant (i.e., 1992) dollars against time.

2. Letting Y denote GDP and X time (measured chronologically starting with 1 for 1959, 2 for 1960, through 39 for 1997), see if the following model fits the GDP data:

Yt = β1 + β2 Xt + ut

Estimate this model for both current and constant-dollar GDP.

3. How would you interpret β2?

4. If there is a difference between β2 estimated for current-dollar GDP and that estimated for constant-dollar GDP, what explains the difference?

5. From your results what can you say about the nature of inflation in the United States over the sample period?

TABLE 3.8 NOMINAL AND REAL GDP, UNITED STATES, 1959-1997
Year
NGDP
RGDP
Year
NGDP
RGDP
4630.600
4615.000
1959
507.2000
2210.200
1979
2557.500
1960
526.6000
2262.900
1980
2784.200
4720.700
4620.300
1961
544.8000
2314.300
1981
3115.900
1962
585.2000
2454.800
1982
3242.100
1963
617.4000
2559.400
1983
3514.500
4803.700
1964
663.0000
2708.400
1984
1985
3902.400
5140.100
1965
719.1000
2881.100
4180.700
5323.500
1966
787.7000
3069.200
1986
4422.200
5487.700
1967
833.6000
3147.200
1987
4692.300
5649.500
1968
910.6000
3293.900
1988
5049.600
5865.200
1969
982.2000
3393.600
1989
5438.700
6062.000
1970
1971
1035.600
3397.600
1990
5743.800
6136.300
1125.400
3510.000
1991
5916.700
6079.400
1972
1973
1974
1237.300
3702.300
1992
6244.400
6244.400
1382.600
1496.900
1630.600
3916.300
1993
6558.100
6389.600
3891.200
1994
6947.000
6610.700
1975
3873.900
1995
7269.600
6761.700
1976
1977
1819.000
4082.900
1996
7661.600
6994.800
2026.900
4273.600
1997
8110.900
7269.800
1978
2291.400
4503.000

Definition Video Definition Overall monetary value of all the complete or final services and goods that a country can produce within its domestic boundaries in a specific period. Video

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