Problem Set 3

library(foreign)
library(plotly)

## Loading required package: ggplot2

## 
## Attaching package: 'plotly'

## The following object is masked from 'package:ggplot2':
## 
##     last_plot

## The following object is masked from 'package:stats':
## 
##     filter

## The following object is masked from 'package:graphics':
## 
##     layout

library(dplyr)

## 
## Attaching package: 'dplyr'

## The following objects are masked from 'package:stats':
## 
##     filter, lag

## The following objects are masked from 'package:base':
## 
##     intersect, setdiff, setequal, union

#Grab hjones.dta file
hjones.dt <- read.dta(file.choose())
#1) Plot of Output to labor vs Capital to Labor
p <- plot_ly(hjones.dt, x = ~hjlogyl, y = ~hjlogkl, type = 'scatter',
             mode = 'text', text = ~wbcode, textposition = 'middle right',
             textfont = list(color = '#000000', size = 8)) %>%
 layout(title = 'Output/Labor and Capital/Labor',
        xaxis = list(title = 'Output/Labor',
                     zeroline = TRUE),
        yaxis = list(title = 'Capital/Labor'
                     ))
p

## Warning: Ignoring 25 observations

#2) Linear Model
lm(hjlogyl ~ hjlogkl, data =hjones.dt )

## 
## Call:
## lm(formula = hjlogyl ~ hjlogkl, data = hjones.dt)
## 
## Coefficients:
## (Intercept)      hjlogkl  
##      2.7048       0.6545

#for everyone 1 unit change in the log of capital to labor ratio,
#the output to labor ration increases by .6545

#3) TFP
TFP.fct <- function(output, capital, labor) {
 return((output/(labor^.07*capital^.03)))
}


#Calculate TFP for each country
hjones.dt <- hjones.dt %>% 
 mutate(TFP = TFP.fct(hjlogyl, hjlogkl, hjloghl))

#Average TFP
mean(hjones.dt$TFP, na.rm = TRUE)

## [1] 8.582785