economic paper with data analysis

​Term Paper II  Due: December 9, 2020 

  Course Name and Number: ​MBAF 504: Economics from a Business Perspective     Term Paper II is prepared to check your understanding of the long-run economic growth and                              disparities between countries’ levels of development based on empirical evidence. You are                        expected to extract the data for this purpose of analysis from relevant credible sources. Originality                              and clarity in your work are highly valued. As usual, this paper will be submitted through Turnitin                                  to review for plagiarism. This work accounts for 20% of your total grading of the course.        Long-run Economic Growth & Convergence    Extract the data for GDP per capita of all sovereign countries for selected years of 1960, 1990                                  and 2015 from global databases (like the IMF or World Bank) and perform a convergence data                                analysis based on the following questions. You can use any data analysis programming language                            that you are convenient with for this term paper. You can also use the programing language which                                  we used in the class, Gretl, accessible for free download at​ ​http://gretl.sourceforge.net​ .   

1. Introduction   ● Discuss Long-Run Economic Growth  ● Will the poor countries catch up rich countries by growing faster?   ● Identify between conditional and unconditional convergence 

2. Background   ● Provide a summary statistics table for all countries  ● Select 10 sample countries from the data (5 poor and 5 rich) and explain what important                               

key historic or economic factors have happened during the years under consideration and                          how is this reflected in their per capita GDP? Make an economic analysis of the                              characteristics of these countries under consideration.  

3. Data Analysis  ● Using data of GDP per capita provided in the dataset, plot histograms of GDP for all the years                                   

between 1960 and 2015 and describe how the distribution of income evolves. If there are any                                outliers, omit them. In a case where you encounter any outlier, then provide economic intuition                              for evaluating these countries as outliers. 

● Calculate the Growth rate of GDP per capita for each of the countries in the years under                                  consideration. Show boxplots of incomes for all the countries in each year. What happened? Is                              there any evidence for convergence? Discuss the notions of conditional and unconditional                        convergence in this regard (Hint.: Use logs instead of levels).  

● Split the data into two groups of poor and rich. The split should be done according to the                                    median income in 1990. Then show boxplots of incomes for both groups in each year. What                               

happened? Is there any evidence for convergence? (Hint.: Use logs instead of levels. Start with                              splitting the sample: poor in 1960, 1990 and 2015, then the same for the rich. Plot boxplots for                                    each).  

4. Extract the GDP, investment, education, political stability or other socio-political and economic                        factors for all the economies. Run the regression analysis both for the conditional and                            unconditional convergence for a sample of developed countries and developed countries, each                        separately and an aggregate analysis for the global economy. The selection for the development                            level categories can follow regional divisions or international organization membership, etc…. (For                        e.g. OECD, Western Economies, OPEC, BRICS, etc) . Plot the respective convergence analysis                          scatter plots depicting the convergence behaviour. (Use the average per capita GDP growth                          between 1990 and 2015 as a dependent variable and GDP growth rate in 1960 as the                                independent variable for the unconditional regression analysis. For the conditional convergence,                      use additional explanatory variables in addition to the GDP growth rate in 1960 ).    NB: 

a) Unconditional convergence: (e.g. for the years between 1960 - 2000) 

ΔGDP​2000-1980 ​=α + βΔGDP​1960    ln​GDP​2000-1980 ​=α + β​ln​GDP​1960  

 

b) Conditional convergence (e.g. for the years between 1960 - 2000) 

ΔGDP​2000-1980 ​=α + βΔGDP​1960 ​+γX​1960  where X​1960 is a set of country-specific controls (education, fiscal and monetary policy,                          competition level, etc.) - we compare countries with similar starting characteristics   

5. Explanation of Economic growth and Convergence  Explain the structure of the data provided and how it characterizes the countries under                            consideration over the years that are taken into account. Using your own words, explain why you                                believe that the poor countries in the data can (cannot) catch up with the rich countries? Your                                  argument should be based on the convergence analysis you made from the data. You can support                                your argument by citing relevant works that are in line with your analysis.   

6. Conclusion   In summing up your analysis; provide a summary of the main points in your paper in connection                                  with the theory of long-run economic growth and convergence.       The general content and flow of the paper should follow: 

1. Introduction   2. Background   3. Data Analysis  4. Explanation of Economic growth and Convergence  5. Conclusion  6. References