Gross domestic product (gdp) for the united states

3.23.    Table 3.8 gives data on gross domestic product (GDP) for the United States for the years 1959–1997.

a.   Plot the GDP data in current and constant (i.e., 1992) dollars against time.

b.   Letting denote GDP and time (measured chronologically starting with 1 for 1959, 2 for 1960, through 39 for 1997), see if the following model ﬁts the GDP data:

Yt   β1 + βXut

Estimate this model for both current and constant-dollar GDP.

c.   How would you interpret β2 ?

d.   If there is a difference between β2 estimated for current-dollar GDP and that estimated for constant-dollar GDP, what explains the difference?

TABLE 3.8     NOMINAL AND REAL GDP, UNITED STATES, 1959–1997

 Year NGDP RGDP Year NGDP RGDP 1959 507.2000 2210.200 1979 2557.500 4630.600 1960 526.6000 2262.900 1980 2784.200 4615.000 1961 544.8000 2314.300 1981 3115.900 4720.700 1962 585.2000 2454.800 1982 3242.100 4620.300 1963 617.4000 2559.400 1983 3514.500 4803.700 1964 663.0000 2708.400 1984 3902.400 5140.100 1965 719.1000 2881.100 1985 4180.700 5323.500 1966 787.7000 3069.200 1986 4422.200 5487.700 1967 833.6000 3147.200 1987 4692.300 5649.500 1968 910.6000 3293.900 1988 5049.600 5865.200 1969 982.2000 3393.600 1989 5438.700 6062.000 1970 1035.600 3397.600 1990 5743.800 6136.300 1971 1125.400 3510.000 1991 5916.700 6079.400 1972 1237.300 3702.300 1992 6244.400 6244.400 1973 1382.600 3916.300 1993 6558.100 6389.600 1974 1496.900 3891.200 1994 6947.000 6610.700 1975 1630.600 3873.900 1995 7269.600 6761.700 1976 1819.000 4082.900 1996 7661.600 6994.800 1977 2026.900 4273.600 1997 8110.900 7269.800 1978 2291.400 4503.000

Note: NGDP = nominal GDP (current dollars in billions).

RGDP = real GDP (1992 billions of dollars).

Source: Economic Report of the President, 1999, Tables B-1 and B-2, pp. 326–328.

e.   From your results what can you say about the nature of inﬂation in the United States over the sample period?

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