Using sound economic theory, develop a macroeconomic econometric model that would test the relationshipbetween globalisation and economic development in South Africa. You are to state the a priori expectations ofwhat the model would tell us, and you are to write the model using ‘Word Equation’. Finally, each variable that isincluded must be justified regarding its relevance for being there.
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Using sound economic theory, develop a
between globalisation and economic development in South Africa. You are to state the a priori expectations of
what the model would tell us, and you are to write the model using ‘Word Equation’. Finally, each variable that is
included must be justified regarding its relevance for being there.
Step by step
Solved in 2 steps
- a) What are some of the main assumptions behind the H-O (Heckscher-Ohlin) model. b) What is/are the assumption(s) of the H-O model in regards to demand? How does (do) this (these) deviate from the Classical School assumptions? c) Examine the Stolper-Samuelson Theorem in conjunction with the H-O model and the factors of production.D2) Economics In the R program, with what code is the vector outoregressive model found? (for daily return)By using the concept of the Heckscher-Ohlin model, and information assumptionsbelow this i. Two factors of production, namely Labor and Landii. Two production goods, namely Cloth and Foodiii. Cloth production is labor intensiveiv. Food production is land intensivev. The rest are other HO assumptionsvi. aLC, aTC, aLF, aTF, and a*LC, a*TC, a*LF, a*TF areLabor and Land input units used for the production of eacheach Cloth and Foodvii. w is the factor price of Labor and r is the factor priceLand production a) Show that Cloth is a commodity that is labor intensive and Foodis a land intensive commodity?k) According to the Stolper-Samuelson Theorem, an increase in the relative price of outputPC/PF, how does it affecta) The relative income of the factors of production Labor and Land or w/r?b) Land/Labor Ratio? l) According to the H-O Model, a country has a comparative advantagein producing a commodity when? Give an example. m) According to Rybczynski theorem with an increase in the factor of…
- The South African Rand flactuates widly on a daily, weekly, monthly basis. Identify all the variables that would be used in an econometric equation that estimates the relationship between South african economic growth and exchange rates (dollar to rand). appraise each variable that is included in the model using economics theory and briefly discuss the tests used to ensure model is statistically sound.1. Expain in detail a) What are Computable General Equilibria Models? b) Can a country enacting a tariff have a portion of that tariff paid by foreign producers? If yes, why & show it by using an appropriate diagram.Consider now the two-period model in general equilibrium, so that prices, investment, and labor supply are endogenous, i.e. the production economy. Analyze and carefully explain graphically and in words the general equilibrium effects of a decrease in TFP for a benchmark economy with no frictions.
- Suppose, as an economist, you are asked to analyze an issue unlike anything you have ever done before. Also, suppose you do not have a specific model for analyzing that issue. What should you do? Hint: What would a carpenter do in a similar situation?Consider a model of revolutions. Society is made up of N > 1 people. Simultaneously, each person chooses whether or not to participate. If n people participate, the probability the revolution succeeds is n/N. If the revolution succeeds, each member of society receives the benefits of a public good worth B. In addition, each person who participated in the revolution receives a benefit R if the revolution succeeds. (This extra benefit called a club good, might represent special access to government jobs for people who helped unseat the government once the new government is formed, or it might just represent an expressive benefit of participating in a victorious revolution.) The cost of participating is c > 0. Assume that R > cand that B + R < N × c. a. Suppose a player believes n other people will participate. What is her expected utility from participating? b. Suppose a player believes n other people will participate. What is her expected utility from not participating? (c)…Consider a model of revolutions. Society is made up of N > 1 people. Simultaneously, each person chooses whether or not to participate. If n people participate, the probability the revolution succeeds is n/N. If the revolution succeeds, each member of society receives the benefits of a public good worth B. In addition, each person who participated in the revolution receives a benefit R if the revolution succeeds. (This extra benefit called a club good, might represent special access to government jobs for people who helped unseat the government once the new government is formed, or it might just represent an expressive benefit of participating in a victorious revolution.) The cost of participating is c > 0. Assume that R > c and that B + R < N × c. (a) Write down a player’s best response correspondence. (b) Identify all of the pure strategy Nash equilibria of this game. (c) Calculate the utilitarian payoff associated with each equilibrium. (d) Does this game…
- Explain why it is important for an economic modelto be an abstraction from the real world.Suppose in our model, lifespans increased due to a productivity in- crease. What would likely happen to hours worked and leisure over the lifetime of a representative consumer. (a) Let’s consider one of two common ways of implementing this change. Suppose the increase raised both lifespans and the amount of years consumers are healthy enough to work by the same amount, how would that likely affect the measured numbered of hours work by prime aged adults within a given year? What would likely hap- pen to the retirement age? (b) Let’s consider the other way to implement it. Suppose the change in lifetimes came about changes in technology that delayed death but did not extend the amount of years consumers are healthy enough to work. What would likely happen to hours worked within a year? What would happen to the retirement age? (c) In the US, the generalized stylized fact is that the actual age of retirement is not increasing. Nor are hours worked per week. Why are both of the…Combinations of goods outside the productionpossibilities curve (PPC) have which of the followingcharacteristics?a. They are attainable today only if weemploy all unemployed or underemployedresources.b. They are not attainable given our existingstock of resources and technology.c. They imply that some resources, such aslabor, are unemployed or underemployed.d. None of the answers is correct.