Post by Guest on May 11, 2016 14:56:13 GMT
Trend and cycle: The natural log of GDP, log (Y ), from 2007 to 2012 was 10.01, 10.00, 9.95, 9.97, 10.01, 10.05, respectively. It is believed that GDP was equal to trend GDP in 2007, and that trend GDP growth is 2% per year. Where is GDP relative to trend GDP in 2012?
Since we’re working in log-levels, trend GDP for 2007 to 2012 is 10.01, 10.03, 10.05, 10.07, 10.09, 10.11, respectively. Actual minus trend in 2012 = 10.05-10.11 = -.06, or 6% below trend
Why do you just add 0.02? I get that this is the 2% growth change, but I don't understand why you just add that to the log values.
Cheers
Since we’re working in log-levels, trend GDP for 2007 to 2012 is 10.01, 10.03, 10.05, 10.07, 10.09, 10.11, respectively. Actual minus trend in 2012 = 10.05-10.11 = -.06, or 6% below trend
Why do you just add 0.02? I get that this is the 2% growth change, but I don't understand why you just add that to the log values.
Cheers
