Three Irish sisters are thinking about emigrating in 1870. The options are going to the United States or Argentina, or staying in Ireland. They cannot agree where to go and split up. One stays in Ireland, one emigrates to the United States and one to Argentina. The following table provides information on real GDP per capita in 1870, 1913, and 1929 in Ireland, the United States and Argentina expressed in U.S. dollars of 1990, which we will use to analyze how each did. real GDP per capita 1870 1913 1929 Ireland 1,775 2,736 2,824 United States 2,445 5,301 6,899 Argentina 1,311 3,797 4,367 (c) Compute the present value of income in each country between 1870 and 1913 assuming that real GDP per capita grew at a constant rate between 1870 and 1913 and that the discount rate is 3 percent per year. Ex post, from the viewpoint of 1913, which sister made the best choice and why. Which one made the worst choice and why. Explain.
Three Irish sisters are thinking about emigrating in 1870. The options
are going to the United States or Argentina, or staying in Ireland. They cannot agree where to go and split up. One stays in Ireland, one emigrates to the United States and one to Argentina. The following table provides information on real GDP per capita in 1870, 1913, and 1929 in Ireland, the
United States and Argentina expressed in U.S. dollars of 1990, which we will use to analyze how each did.
real GDP per capita
1870 1913 1929
Ireland 1,775 2,736 2,824
United States 2,445 5,301 6,899
Argentina 1,311 3,797 4,367
(c) Compute the
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