You Have Collected Data for a Cross-Section of Countries in Two

question 7

Essay

You have collected data for a cross-section of countries in two time periods, 1960 and 1997, say. Your task is to find the determinants for the Wealth of a Nation (per capita income)and you believe that there are three major determinants: investment in physical capital in both time periods (X_1,T and X_1,0), investment in human capital or education (X_2,T and X_2,0), and per capita income in the initial period
(Y₀). You run the following regression:
ln(Y_T)= β₀ + β₁X_1,T + β₂X_1,0 + β₃X_2,T + β₄X_1,0 + ln(Y₀)+ u_T
One of your peers suggests that instead, you should run the growth rate in per capita income over the two periods on the change in physical and human capital. For those results to be a parsimonious presentation of your initial regression, what three restrictions would have to hold? How would you test for these? The same person also points out to you that the intercept vanishes in equations where the data is differenced. Is that correct?

Know the phases of the product life cycle and their implications for product design.

Identify the role of quality function deployment in translating customer requirements into product design.

Understand the concept of robust product design.

Grasp the principles and practices of risk management and failure tolerance in new product development.

---

Definitions:

Domestic Quantity Supplied

The amount of a product or service that producers are willing and able to sell within a country's borders at a given price level.

Domestic Quantity Demanded

The total amount of a product that consumers in a specific country are willing and able to purchase at various prices during a given period.

Equilibrium

A state where supply and demand are balanced, leading to a stable market condition.

Export

The selling of goods or services produced in one country to buyers in another country.