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2023 PEA Q15

gi=α+β0log⁡yi,0+β1log⁡ni+β2log⁡si+γXi+εig_i=\alpha+\beta_0\log y_{i,0}+\beta_1\log n_i+\beta_2\log s_i+\gamma X_i+\varepsilon_i. The Solow model predicts the sign of β0\beta_0:

Reveal answer and solution

Answer

A

Solution

  1. 1

    Conditional convergence: countries starting with lower per-capita output grow faster (controlling for n,s,Xn,s,X). So gig_i is negatively related to log⁡yi,0\log y_{i,0}.

Answer structure / marking notes

This is conditional convergence; unconditional convergence is empirically weak.

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Content note

Imported from public/resources/isi/msqe/solutions/pea/2023/ISI_MSQE_PEA_2023_Solutions.tex. Question wording is retained from the available local TeX source; incomplete option blocks or ambiguous source status are flagged for review.