Refer to Table 4.4 “Measuring TFP So the Model Fits Exactly”. The “implied TFP (A_bar)” in the last column is 0.710 for Spain. What does this value mean?A. Spain’s per capital GDP is 71% of that of the U.S. B. Spanish workers tend to have longer holidays and shorter working days than U.S. workers C. At any given level of per capita capital, Spanish workers produce 71% of the output of U.S. workers D. This number refer to the margin of error in producing the statistics in the table In order for our modelto match the data, poorcountries must be veryinefficient in production;that is, they must havelow TFP.TABLE 4.4Measuring TFP So the Model Fits ExactlyPer capitaGDP (y)CountryUnited StatesSwitzerlandU.K.JapanItalySpainChinaBrazilSouth AfricaIndiaBurundi1.0001.1510.7140.7340.6800.6400.2790.2520.2140.1170.015K 1/31.0001.0940.8850.9760.9300.9010.6510.5870.5590.4330.173ImpliedTFP (A)1.0001.0520.8070.7520.7310.7100.4290.4290.3830.2700.084Calculations are based on the equation y=AK1/3. Implied productivity A is calculated from data on y and K for the year2010, so that this equation holds exactly as Ā = y/K ¹/³

Production Function: Production function represents a relationship between the input and output. It…

Answered: Refer to Table 4.4 “Measuring TFP So…

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Refer to Table 4.4 “Measuring TFP So the Model Fits Exactly”. The “implied TFP (A_bar)” in the last column is 0.710 for Spain. What does this value mean?

A. Spain’s per capital GDP is 71% of that of the U.S.
B. Spanish workers tend to have longer holidays and shorter working days than U.S. workers
C. At any given level of per capita capital, Spanish workers produce 71% of the output of U.S. workers
D. This number refer to the margin of error in producing the statistics in the table

In order for our model
to match the data, poor
countries must be very
inefficient in production;
that is, they must have
low TFP.
TABLE 4.4
Measuring TFP So the Model Fits Exactly
Per capita
GDP (y)
Country
United States
Switzerland
U.K.
Japan
Italy
Spain
China
Brazil
South Africa
India
Burundi
1.000
1.151
0.714
0.734
0.680
0.640
0.279
0.252
0.214
0.117
0.015
K 1/3
1.000
1.094
0.885
0.976
0.930
0.901
0.651
0.587
0.559
0.433
0.173
Implied
TFP (A)
1.000
1.052
0.807
0.752
0.731
0.710
0.429
0.429
0.383
0.270
0.084
Calculations are based on the equation y=AK1/3. Implied productivity A is calculated from data on y and K for the year
2010, so that this equation holds exactly as Ā = y/K ¹/³

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