Institutional arrangements is most likely to promote growth

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Reference no: EM1311707

Q1. Draw graphs of AR(1) process y_k = 0.75y_k-1 + e_k for

a) y_0 = 1
b) y_0 = 10.

Suppose that e_k is uniformly distributed on the interval [-0.5, 0.5].

Hint: use the function rand () (or similar) for uniform distribution on the interval [0, 1] available in modern languages (C/C++, Java) also computational software (Excel, Matlab etc.) also subtract 0.5 from its values.

Express qualitative difference among the graphs a) also b).

Q2. Which of the following institutional arrangements is most likely to promote growth?

Reference no: EM1311707

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