Exam

Question 1

Give some reasons why GDP may fail to measure value added in a country.

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Question 2

Briefly explain the difference between exchange rate conversion and PPP
conversion of GDP.

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Question 3

Using the information in PRLB Table 2-1, use Indian prices to calculate GDP for US
and India in PPP Rupees. Comment on the result relative to using US prices and
USD.

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Question 4

Based on the growth rates presented in Table 2-3. How many years would it take
for the average country in each region to double its GDP per capita if it grew as
recorded in the 2000s?

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Question 5

Explain the so-called Easterlin paradox.

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Question 6

Explain briefly whether the Washington Consensus was consistently grounded in
economic theory or should more be considered as a policy paradigm.

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Question 7

Outline the six common elements of sustained growth experiences, and highlight
which channel was under-emphasized in the Washington Consensus strategy

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Question 8

Please give some reasons why food only constitutes about ½ to ¾ of the total
consumption expenditure for the extremely poor people in the world.

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Question 9

Please give some reasons why the extremely poor people in the world are often
involved in many occupations.

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Question 10

Please explain the referencing problem in theoretical poverty analyses and explain
how the referencing is “solved” in practice using the cost-of-basic-needs method.

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Question 11

Please explain the identification problem in theoretical poverty analyses and
explain how the problem is “solved” in practice in most poverty measurements
developing countries.

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Question 12

Explain the concepts strongly relative versus weakly relative poverty lines and
describe the problems with each respective measure. Outline a possible solution to
the problems.

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Question 13

Please explain briefly, why intra-household inequality may be a source of bias in
survey-based estimates of inequality and state if the bias is positive or negative.

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Question 14

Please explain how it is possible to argue that:
- Global inequality has increased from around 1980 to around 2000
- Global inequality has decreased from around 1980 to around 2000
- Global inequality has been roughly constant from around 1980 to around 2000

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Question 15

Please explain how income inequality may affect the accumulation of physical
capital.

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Question 16

Please explain how income inequality may affect the accumulation of human capital.

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Question 17

Please describe the difference between absolute and relative inequality

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Question 18

Please explain how to easily test the poverty-inequality relationship. Comment on
the empirical relationship between:
a. Absolute Poverty and Absolute Inequality
b. Absolute Poverty and Relative Inequality

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Question 19

Please explain what is meant by the notion “conditional convergence” and clarify how
it differs from “unconditional convergence”.

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Question 20

Please define and explain the development and growth accounting, respectively.

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Question 21

Please describe the 4 stages of the demographic transition.

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Question 22

Please outline and describe the 3 scenarios for how total fertility rates can stay
above replacement rates.

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Question 23

Please describe likely causes of the mortality and fertility transitions, respectively
and discuss the sequencing of the transitions.

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Question 24

Outline the basic ideas of population pessimists versus population optimists.

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Question 25

Outline the likely estimation biases faced when analyzing the relationship between population growth and income.

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Question 26

Describe using a Solow model framework how migration is likely to influence capital accumulation (including the underlying assumptions). Consider both the case where migration is “just” influencing population growth (n) as compared to the situation where migrants is assumed to bring productive capital.

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Question 27

Outline the 4 important questions to ask when evaluating traditional migration models against empirical evidence?

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Question 28

Please explain the difference between the gross and the net enrollment rate and explain how the average primary gross enrollment rate can be larger than 100%.

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Question 29

Please explain (graphically) the Mincerian investment decision in education

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Question 30

Please give three examples of problems of school funding in developing countries

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Question 31

Please illustrate and describe the 3 main lessons learned from the Preston Curves.

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Question 32

Please explain the theoretical relationship between health and education using the envelope theorem

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Question 33

Please describe at least two reasons for why savings rates differ across countries, and briefly explain each of the reasons/implications for development policy?

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Question 34

Based on the 3 figures below explain the allocation puzzle and whether it is an investment or a savings puzzle.

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Question 35

Please outline and describe the main pros and cons of attracting FDI.

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Question 36

Please describe the key FDI knowledge transfer/spillover mechanisms.

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Question 37

Describe the positive and negative mechanisms of vertical FDI spillovers (backward and forward spillovers).

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Question 38

Please outline 3 sources of productivity (TFP) growth at the firm level.

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Question 39

Please describe what is meant by resource misallocation and illustrate how relative marginal products of capital can be used to identify whether firms of different employment size are financially constrained.

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Question 40

Please explain what increased variance in TFPQ and TFPR, respectively will do to sector level TFP (assume elasticity of substitution is larger than 2).

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Question 41

From the Table, please calculate the relative firm size difference between the 75 percentile and the 25 percentile for the 4 African countries. Moreover, comment on the magnitude of the correlated distortions.

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Question 42

Please outline the assumptions leading to marginal products of capital (MPK) being proportional to average product of capital (APK).

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Question 43

Please describe what is meant by the “missing middle” and outline two different ways of testing the hypothesis.

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Question 44

Please give three different motives for providing foreign aid

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Question 45

Please explain how donations of food to a country can hurt local farmers by undermining the incentives for them to produce food. [PRLB box 14-5]

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Question 46

Please explain and present graphically the three views on aid and growth given in PRLB chapter 14.

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Question 47

Please sketch or draw two simple versions of the Solow growth model in which a temporary inflow of foreign aid may have permanent effects on the level of income per capita. [Hint: Think of low-income traps generated by low savings rates and high population growth rates].

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Question 48

Please explain how Galiani et al. (2017) identifies exogenous changes in foreign aid to 38 recipient countries

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Question 49

Please outline and describe (graphically) the Lewis model.

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Question 50

Please explain and describe graphically how to reach the result of an inverse relationship between land size and farming intensity.

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Question 51

Please describe the “separation hypothesis” and outline an empirical test to verify or falsify the hypothesis.

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Question 52

Please outline the pros and cons (from an efficiency point of view) of smallholder farming

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Question 53

Please provide a 2 country-2 product example that explains absolute versus comparative advantages.

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Question 54

Please explain the predictions of traditional trade theory in relation to within country inequality in developing countries and what the empirical evidence suggests.

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Question 55

Please explain the underlying idea behind the theory of economics complexity

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Question 56

Please explain how warfare can both lead to an increase and a decrease in post- conflict welfare.

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Question 57

Please outline the main warfare predictions of the contest model in relation to poverty and wealth effects.

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Question 58

Please explain the difference between climate mitigation and climate adaptation.

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Question 59

Using Figure 1 on the next page, please explain how Burke et al. (2015) connect micro evidence on abrupt changes in productivity from increased temperature with smooth changes at the macro level.

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Question 60

Please explain how Burke et al. (2015) find and compute the global non-linear relationship between annual average temperature and change in log gross domestic product (GDP) per capita (thick black line) in Figure 2 below.

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