For classes in week 4, we are looking in more detail at material covered in week 2’s lectures, and (to some extent) in week 3’s classes, namely chapters 4–5 of Miles et al, Total Factor Productivity and Human Capital.

Maths Exercise

  1. Derive, and explain each step of your working, the Golden Rule. What assumptions are made in your calculations, and are they realistic?

Data Exercise

  1. Consider the spreadsheet from the ONS at http://www.ons.gov.uk/ons/rel/bus-invest/business-investment/q3-2014-revised-results/rft-gfcf.xls.
    1. What are the “chained-volume measures” found in sheets G1–G8?
    2. Does seasonal adjustment matter?
    3. Is data since 1997 enough to form reasonable conclusions about investment patterns?
    4. Do you see evidence in the data supportive or otherwise of the Golden Rule?