10. The (real) GDP per capita in Belgium (in €) is provided for several years in the table below:yearGDP201033 509.07201133 641.302012 33 443.71201333 259.76201433 728.14201534 028.24201634 209.76a. Let us denote GDP in year t by Yt. Determine the percentage change for each year using theformula rt =Y-Y-1. Compare the results to the log-returns In ().1b. You are also given that Y1990 = 25 039.06. Again compare the percentage change over the period1990-2016 with the corresponding log-return.There are several reasons why percentage changes are often approximated by log-returns. One of thereasons is that the logarithm has nice mathematical properties. For example: log-returns allow foreasier time aggregation as is illustrated in parts c. and d. below.c. Show that the percentage change Y2016-Y2013 over the three-year period from 2013 to 2016 equals(1+r2016) (1+r2015)(1+r2014) - 1.d. Show that the log-return In (Y2016) for the same period is simply the sum of the yearly log-returns.

Above problem provides the GDP per capita of Begium and asks to draw comparison between two methods…

The (real) GDP per capita in Belgium (in €) is provided for several years in the table below: year GDP 2010 33 509.07 2011 33 641.30 2012 33 443.71 2013 33 259.76 2014 33 728.14 2015 34 028.24 2016 34 209.76 a. Let us denote GDP in year t by Yt. Determine the percentage change for each year using the formula rt= Y₁-Y-1. Compare the results to the log-returns In (₁).

The (real) GDP per capita in Belgium (in €) is provided for several years in the table below: year GDP 2010 33 509.07 2011 33 641.30 2012 33 443.71 2013 33 259.76 2014 33 728.14 2015 34 028.24 2016 34 209.76 a. Let us denote GDP in year t by Yt. Determine the percentage change for each year using the formula rt= Y₁-Y-1. Compare the results to the log-returns In (₁).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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