Name: Boakye Dankwah ID: 10875470 Date: 13 th August 2021

UNIVERSITY OF GHANA BUSINESS SCHOOL

(Department of Finance)
MPHIL PROGRAMME SECOND SEMESTER 2019/2020
FINC 652: DEVELOPMENT ECONOMICS FOR FINANCE
Instructor: Patrick O. Asuming, PhD.

Problem Set One

1.

a. Y 2019 =Y 1960 e rt
r × 59
2202.12=182.98 e
2202.12
ln( )
182.98 = 0.04217 =4.22%
r=
59

b.
Series 1960 1990 2019
GDP per capita (current US$) 158.25 - 31846.22
GDP per capita (constant 2010 US$) 932.04 - 28675.03
GDP per capita, PPP (current international - 8352.6 42728.0
$)

31846.22
ln ( )
For current US$ 158.25 = 0.0899 = 9%
r=
59
28675.03
ln ( )
For constant 2010 US$ 932.04 = 0.0581 = 5.81%
r=
59
42728.0
ln( )
For PPP (current international $) $ 8352.6 = 0.0563 = 5.63%
r=
29
Name: Boakye Dankwah ID: 10875470 Date: 13 th August 2021

c.
Country Series 1960 1990 2019 Annualized Growth Rate
Benin GDP per capita (current US$) 93.02 1219.52 4.36%
Burkina Faso GDP per capita (current US$) 68.42 786.90 4.14%
Cabo Verde GDP per capita (current US$) .. 908.09 3603.78 4.75%
Cote d'Ivoire GDP per capita (current US$) 155.90 2276.33 4.54%
Gambia, The GDP per capita (current US$) .. 331.82 777.82 2.94%
Ghana GDP per capita (current US$) 183.45 2210.36 4.22%
Liberia GDP per capita (current US$) .. .. 621.89 ..
Mali GDP per capita (current US$) .. 317.39 879.12 3.51%
Nigeria GDP per capita (current US$) 92.96 2229.86 5.39%
Niger GDP per capita (current US$) 132.65 553.89 2.42%
Sierra Leone GDP per capita (current US$) 138.94 527.53 2.26%
Togo GDP per capita (current US$) 76.64 893.35 4.16%
Senegal GDP per capita (current US$) 312.99 1430.15 2.58%
Guinea .. 419.81 1058.14 3.19%
Guinea-Bissau GDP per capita (current US$) .. 250.15 749.45 1.86%

Country Series 1960 1980 2019 Annualized Growth Rate

Benin GDP per capita (constant 2010 US$) 711.94 1259.81 0.97%
Burkina Faso GDP per capita (constant 2010 US$) 268.74 822.20 1.90%
Cabo Verde GDP per capita (constant 2010 US$)
.. 680.49 3907.65 4.48%
Cote d'Ivoire GDP per capita (constant 2010 US$) 1225.52 1727.28 0.58%
Gambia, The GDP per capita (constant 2010 US$)
.. 873.24 815.22 -0.18%
Ghana GDP per capita (constant 2010 US$) 1056.73 1880.26 0.98%
Guinea GDP per capita (constant 2010 US$)
.. .. 922.67 ..
Guinea-Bissau GDP per capita (constant 2010 US$)
.. 489.24 619.53 0.61%
Mali GDP per capita (constant 2010 US$)
.. 447.69 791.76 1.46%
Nigeria GDP per capita (constant 2010 US$) 1360.42 2374.37 0.94%
Niger GDP per capita (constant 2010 US$) 825.94 563.15 -0.65%
Sierra Leone GDP per capita (constant 2010 US$) 372.71 488.89 0.46%
Senegal GDP per capita (constant 2010 US$) 1326.34 1528.14 0.24%
Togo GDP per capita (constant 2010 US$) 374.65 697.11 1.05%
Liberia GDP per capita (constant 2010 US$)
.. .. 516.26 ..
Name: Boakye Dankwah ID: 10875470 Date: 13 th August 2021

PROBLEM 2

Given the production function Yt = K αt (At Nt )1-α

Where 0 < α < 1, At+1 = (1+ā)At Nt+1 = Nt N

a.
Diminishing marginal returns occurs when marginal output from production decreases as the
more of production factors are added. For a function to exhibit diminishing marginal returns, the
first and the second derivatives must be positive and negative. Respectively.

Yt = K αt (AtNt)1-α

For K t inputs
∂Yt >0
= α K αt -1(AtNt)1-α
∂Kt

∂²Yt
= α(α-1) K αt -2(AtNt)1-α <0
∂ ² Kt
For A t N t inputs
∂Yt >0
= (1-α) K αt (AtNt)-α
∂ At Nt

∂²Yt
= -α(1-α) K αt (AtNt)-(α+1)
∂ ² At Nt
α
( )
= −α 1−α K t < 0
¿¿¿
Given that 0 < α < 1, the production function exhibits diminishing marginal returns to all inputs.
For a function to exhibit constant returns to scale, a change in factors of production must leads to
a proportional change in output.
Scaling all inputs by λ
Yt = f(Kt , AtNt)
Yt = f(λKt , λAtNt)
f(λKt , λAtNt) = (λ)α (λAtNt)1-α
λ1f(Kt , At Nt) = λαKat λ1-α(AtNt)1-α
Name: Boakye Dankwah ID: 10875470 Date: 13 th August 2021
= λ1 K αt (AtNt)1-α

The power one of the λ shows homogenous degree of one. The production function exhibits
constant returns to scale.

b.) The growth rate of population is zero constant.

By normalizing N = 1
Yt = Kαt(At) (1))1-α
Y t K αt A1−α
t
=
At At

yt = KtαAt-α

[ ]
α α
Kt Kt
yt = α =
At At ❑

yt = kα

yt

kα

kα
c.) Supply Side
Yt = Kat(AtNt)1-α AtNt = Effective labour
Deduce the function to per effective labour form
Yt
= K αt ¿ ¿
At Nt

yt = K αt (AtNt)-α

yt = K αt (AtNt ¿−α
Name: Boakye Dankwah ID: 10875470 Date: 13 th August 2021
yt= kαt

Demand Side
Y t = Ct + It ………………. (1)
Kt+1 = (1-δ)Kt + It
Kt+1 = Kt1- δKt + It
Kt+1 - Kt1+ δKt = It
It = ∆ Kt + δKt ……………….. (2)
Ct = (1-s)Yt ……………… (3)
Substitute (2) and (3) into (1)
Yt = (1-s)Yt + ∆ Kt +δKt
Yt = Yt -sYt + ∆ Kt + δKt
∆ Kt = sYt - δKt
Dividing both sides of equation by effective labour (AtNt), gives us the function in per effective
labour form.
❑
∆ Kt sYt δ Kt
= -
A t N t At N t ❑ At Nt

∆ Kt
=¿ syt -δkt ………. (4)
At Nt

Taking the first difference of Kt,

∆ K t∗ At N t −∆ A t N t∗K t ∆ K t
∆ Kt = = - (ā+n)kt
At Nt At Nt

Given growth rate to be zero constant,

∆ Kt
∆ Kt = - ākt
At Nt
∆ Kt
= ∆ K t + ākt ……………(5)
At Nt

(5) = (4)
syt -δkt = ∆ K t + ākt
∆ K t = syt - δkt - ākt

∆ K t = syt – (δ+ ā)kt

Name: Boakye Dankwah ID: 10875470 Date: 13 th August 2021
∆ K t sy t
= - (δ+ ā)
kt kt

∆ K t s (k tα )
yk = = - (δ+ ā)
kt kt
∆ Kt
yk = = sk α−1
t – (δ + ā) (δ + ā)k
kt
yt

kt

α
s( k t )

kt

The model has a steady state. That is at the point where s(ktα )= (δ + ā)k. At this point the savings
of capital is equal to the depreciation rate and technology level. This is intuitive in the sense that
if individuals’ savings rate is the same as the rate of depreciation and how technology grows, we
expect a constant growth in the economy.

e.) k t can be solved by equating the fundamental equation to zero.

α
s (k t )
- (δ+ ā) =0
kt

sktα-1 – (δ + ā) = 0
sktα-1 = δ + ā

α −1 (δ +ā)
kt =
s

[ ]
1
(δ+ ā) α−1
k t=
s

[ ]
1
s 1−α
kt =
(δ + ā)

k t can be solved by equating the fundamental equation to zero.

k t is initially moves above the steady states and falls below the steady states. Its above the
when the savings rate is higher than the depreciation and technology level and the vice versa.
Name: Boakye Dankwah ID: 10875470 Date: 13 th August 2021
f. This model has a constant depreciation rate and technology growth level, at the steady state
while the standard Solow-Swan model we saw in class has the population growth and the
depreciation.

Problem Set 3
a. Absolute convergence is where poor economies tend to grow faster than rich economies
irrespective of the characteristics of the economies.

Conditional convergence is when poor economies grow faster than rich economies after
conditioning on the character of the economies.

∆ Kt a−1
=sK t −( δ +α )
kt ❑

∆Kt
∂
kt a−1
= ( α−1 ) sK t
∂ kt ❑

Given that 0 < α < 1, the first difference of the function is negative. This shows that the model
exhibits convergence.
The model predicts only conditional convergence.
The convergence is conditioning on savings rate and technology level.

b.
Name: Boakye Dankwah ID: 10875470 Date: 13 th August 2021
Country Series 1960 2019 Growth rate LGDP per Capita
Afghanistan GDP per capita (current US$) 59.77 507.10 3.62% 4.09
Algeria GDP per capita (current US$) 246.30 3975.51 4.71% 5.51
Australia GDP per capita (current US$) 1807.79 55057.20 5.79% 7.50
Austria GDP per capita (current US$) 935.46 50121.55 6.75% 6.84
Bahamas, The GDP per capita (current US$) 1550.27 34863.38 5.28% 7.35
Bangladesh GDP per capita (current US$) 89.04 1855.69 5.15% 4.49
Belgium GDP per capita (current US$) 1273.69 46414.44 6.09% 7.15
Belize GDP per capita (current US$) 304.90 5078.81 4.77% 5.72
Benin GDP per capita (current US$) 93.02 1219.52 4.36% 4.53
Bermuda GDP per capita (current US$) 1902.40 117098.45 6.98% 7.55
Bolivia GDP per capita (current US$) 102.24 3552.07 6.01% 4.63
Botswana GDP per capita (current US$) 60.49 7970.80 8.27% 4.10
Brazil GDP per capita (current US$) 210.11 8897.49 6.35% 5.35
Burkina Faso GDP per capita (current US$) 68.42 786.90 4.14% 4.23
Burundi GDP per capita (current US$) 70.05 261.25 2.23% 4.25
Cambodia GDP per capita (current US$) 111.34 1643.12 4.56% 4.71
Cameroon GDP per capita (current US$) 118.64 1507.45 4.31% 4.78
Canada GDP per capita (current US$) 2259.29 46326.67 5.12% 7.72
Central African Republic GDP per capita (current US$) 74.69 467.91 3.11% 4.31
Chad GDP per capita (current US$) 104.47 709.54 3.25% 4.65
Chile GDP per capita (current US$) 505.35 14741.71 5.72% 6.23
China GDP per capita (current US$) 89.52 10216.63 8.03% 4.49
Colombia GDP per capita (current US$) 251.04 6424.98 5.50% 5.53
Congo, Dem. Rep. GDP per capita (current US$) 220.31 580.72 1.64% 5.40
Congo, Rep. GDP per capita (current US$) 129.37 2359.18 4.92% 4.86
Costa Rica GDP per capita (current US$) 381.36 12669.71 5.94% 5.94
Cote d'Ivoire GDP per capita (current US$) 155.90 2276.33 4.54% 5.05
Dominican Republic GDP per capita (current US$) 204.11 8282.12 6.28% 5.32
Ecuador GDP per capita (current US$) 455.46 6222.52 4.43% 6.12
Eswatini GDP per capita (current US$) 104.21 3894.67 6.14% 4.65
Fiji GDP per capita (current US$) 285.47 6175.87 5.21% 5.65
Finland GDP per capita (current US$) 1179.35 48711.56 6.31% 7.07
France GDP per capita (current US$) 1334.69 40380.10 5.78% 7.20
Gabon GDP per capita (current US$) 282.42 7767.02 5.62% 5.64
Ghana GDP per capita (current US$) 183.45 2210.36 4.22% 5.21
Greece GDP per capita (current US$) 520.32 19150.79 6.11% 6.25
Guatemala GDP per capita (current US$) 252.76 4638.63 4.93% 5.53
Guyana GDP per capita (current US$) 297.68 6609.51 5.25% 5.70
Haiti GDP per capita (current US$) 70.66 1272.49 4.90% 4.26
Honduras GDP per capita (current US$) 164.64 2574.36 4.66% 5.10
Hong Kong SAR, China GDP per capita (current US$) 429.44 48354.47 8.01% 6.06
Iceland GDP per capita (current US$) 1414.98 68883.15 6.59% 7.25
India GDP per capita (current US$) 82.19 2100.75 5.49% 4.41
Iran, Islamic Rep. GDP per capita (current US$) 191.68 3114.62 4.73% 5.26
Ireland GDP per capita (current US$) 685.61 80778.83 8.08% 6.53
Israel GDP per capita (current US$) 1229.17 43588.71 6.05% 7.11
Italy GDP per capita (current US$) 804.49 33566.79 6.32% 6.69
Jamaica GDP per capita (current US$) 429.25 5369.50 4.28% 6.06
Japan GDP per capita (current US$) 475.32 40113.06 7.52% 6.16
Kenya GDP per capita (current US$) 97.45 1816.55 4.96% 4.58
Korea, Rep. GDP per capita (current US$) 158.25 31846.22 8.99% 5.06
Lesotho GDP per capita (current US$) 41.30 1113.37 5.58% 3.72
Luxembourg GDP per capita (current US$) 2242.02 114685.17 6.67% 7.72
Madagascar GDP per capita (current US$) 131.99 526.22 2.34% 4.88
Malawi GDP per capita (current US$) 44.52 583.11 4.36% 3.80
Malaysia GDP per capita (current US$) 234.94 11414.20 6.58% 5.46
Mexico GDP per capita (current US$) 345.23 9946.03 5.70% 5.84
Morocco GDP per capita (current US$) 164.80 3230.41 5.04% 5.10
Nepal GDP per capita (current US$) 50.30 1194.96 5.37% 3.92
Netherlands GDP per capita (current US$) 1068.78 52295.04 6.59% 6.97
New Zealand GDP per capita (current US$) 2312.95 41999.37 4.91% 7.75
Nicaragua GDP per capita (current US$) 126.25 1926.70 4.62% 4.84
Niger GDP per capita (current US$) 132.65 553.89 2.42% 4.89
Nigeria GDP per capita (current US$) 92.96 2229.86 5.39% 4.53
Norway GDP per capita (current US$) 1441.76 75826.08 6.72% 7.27
Pakistan GDP per capita (current US$) 83.34 1284.70 4.64% 4.42
Panama GDP per capita (current US$) 474.09 15727.97 5.94% 6.16
Papua New Guinea GDP per capita (current US$) 102.18 2829.17 5.63% 4.63
Peru GDP per capita (current US$) 253.26 7027.61 5.63% 5.53
Philippines GDP per capita (current US$) 254.46 3485.34 4.44% 5.54
Portugal GDP per capita (current US$) 360.50 23284.53 7.06% 5.89
Puerto Rico GDP per capita (current US$) 717.51 32850.55 6.48% 6.58
Rwanda GDP per capita (current US$) 40.54 820.15 5.10% 3.70
Senegal GDP per capita (current US$) 312.99 1430.15 2.58% 5.75
Seychelles GDP per capita (current US$) 288.06 16198.52 6.83% 5.66
Sierra Leone GDP per capita (current US$) 138.94 527.53 2.26% 4.93
Singapore GDP per capita (current US$) 428.06 65640.71 8.53% 6.06
Somalia GDP per capita (current US$) 65.48 320.04 2.69% 4.18
South Africa GDP per capita (current US$) 443.01 6001.40 4.42% 6.09
Spain GDP per capita (current US$) 396.39 29564.74 7.31% 5.98
Sri Lanka GDP per capita (current US$) 142.78 3851.56 5.58% 4.96
St. Kitts and Nevis GDP per capita (current US$) 241.54 19773.46 7.47% 5.49
St. Vincent and the Grenadines GDP per capita (current US$) 161.38 7457.24 6.50% 5.08
Sudan GDP per capita (current US$) 125.86 753.28 3.03% 4.84
Suriname GDP per capita (current US$) 346.16 7261.17 5.16% 5.85
Sweden GDP per capita (current US$) 2114.00 51686.85 5.42% 7.66
Switzerland GDP per capita (current US$) 1787.36 85300.35 6.55% 7.49
Thailand GDP per capita (current US$) 100.77 7817.01 7.37% 4.61
Togo GDP per capita (current US$) 76.64 893.35 4.16% 4.34
Trinidad and Tobago GDP per capita (current US$) 631.71 16637.16 5.54% 6.45
Turkey GDP per capita (current US$) 509.42 9126.59 4.89% 6.23
Uganda GDP per capita (current US$) 62.51 794.45 4.31% 4.14
United Kingdom GDP per capita (current US$) 1397.59 42354.41 5.78% 7.24
United States GDP per capita (current US$) 3007.12 65279.53 5.22% 8.01
Uruguay GDP per capita (current US$) 489.35 17688.02 6.08% 6.19
Zambia GDP per capita (current US$) 232.19 1305.00 2.93% 5.45
Zimbabwe GDP per capita (current US$) 278.81 1156.15 2.41% 5.63
Name: Boakye Dankwah ID: 10875470 Date: 13 th August 2021
c.
Regression Statistics
Multiple R 0.334
R Square 0.112
Adjusted R Square 0.102
Standard Error 0.014
Observations 98.000

ANOVA
df SS MS F Significance F
Regression 1.000 0.002 0.002 12.049 0.001
Residual 96.000 0.019 0.000
Total 97.000 0.022

Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept 0.028 0.007 3.751 0.000 0.013 0.043 0.013 0.043
LGDP per Capita 0.005 0.001 3.471 0.001 0.002 0.007 0.002 0.007

9.00

8.00
Annualized Growth Rate (1960-2019)

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00
1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00%
Log of GDP Per capita in 1960

The regression results show that about 11.2% of the variation of the growth of per capita GDP
between 1960 and 2019 is explained by capita GDP in 1960.
On average, holding all other things constant, one unit change in log of capita GDP in 1960 leads
to 0.005 units change in the annualized growth of per capita GDP between 1960 to 2019. From
the P-values, the model and the impact of the log of capita GDP is statistically significant.

d. The regression results and the graph are against the convergence prediction by the Solow-
Swan model. This is because of the positive relationship and effect between the annualized
growth rate and the log of per capita GDP.
Name: Boakye Dankwah ID: 10875470 Date: 13 th August 2021
e.

Country Series 1960 2019 Growth Rate LnGDP Per Capital (1960)
Australia GDP per capita (current US$) 1807.786 55057.205 0.058 7.500
Austria GDP per capita (current US$) 935.460 50121.554 0.067 6.841
Belgium GDP per capita (current US$) 1273.692 46414.435 0.061 7.150
Canada GDP per capita (current US$) 2259.294 46326.673 0.051 7.723
Chile GDP per capita (current US$) 505.349 14741.714 0.057 6.225
Colombia GDP per capita (current US$) 251.042 6424.979 0.055 5.526
Costa Rica GDP per capita (current US$) 381.364 12669.706 0.059 5.944
Finland GDP per capita (current US$) 1179.35 48711.564 0.063 7.073
France GDP per capita (current US$) 1334.690 40380.099 0.058 7.196
Greece GDP per capita (current US$) 520.323 19150.786 0.061 6.254
Ireland GDP per capita (current US$) 685.615 80778.830 0.081 6.530
Iceland GDP per capita (current US$) 1414.982 68883.149 0.066 7.255
Israel GDP per capita (current US$) 1229.175 43588.713 0.060 7.114
Italy GDP per capita (current US$) 804.493 33566.787 0.063 6.690
Japan GDP per capita (current US$) 475.319 40113.061 0.075 6.164
Korea, Rep. GDP per capita (current US$) 158.249 31846.218 0.090 5.064
Luxembourg GDP per capita (current US$) 2242.016 114685.168 0.067 7.715
Mexico GDP per capita (current US$) 345.231 9946.034 0.057 5.844
Netherlands GDP per capita (current US$) 1068.785 52295.039 0.066 6.974
New Zealand GDP per capita (current US$) 2312.950 41999.368 0.049 7.746
Norway GDP per capita (current US$) 1441.756 75826.082 0.067 7.274
Portugal GDP per capita (current US$) 360.499 23284.527 0.071 5.887
Spain GDP per capita (current US$) 396.392 29564.745 0.073 5.982
Switzerland GDP per capita (current US$) 1787.360 85300.348 0.066 7.488
Sweden GDP per capita (current US$) 2114.003 51686.851 0.054 7.656
Turkey GDP per capita (current US$) 509.424 9126.594 0.049 6.233
United States GDP per capita (current US$) 3007.123 65279.529 0.052 8.009
United Kingdom GDP per capita (current US$) 1397.595 42354.415 0.058 7.243
Name: Boakye Dankwah ID: 10875470 Date: 13 th August 2021
d.
SUMMARY OUTPUT

Regression Statistics
Multiple R 0.449
R Square 0.202
Adjusted R Square 0.171
Standard Error 0.009
Observations 28.000

ANOVA
df SS MS F Significance F
Regression 1.000 0.000 0.000 6.575 0.016
Residual 26.000 0.002 0.000
Total 27.000 0.002

Coefficients Standard Error t Stat P-value Lower 95% Upper 95%Lower 95.0%
Upper 95.0%
Intercept 0.100 0.015 6.839 0.000 0.070 0.130 0.070 0.130
LnGDP Per Capital (1960) -0.005 0.002 -2.564 0.016 -0.010 -0.001 -0.010 -0.001

9.000

8.000

7.000
Annualized Growth Rate

6.000

5.000

4.000

3.000

2.000

1.000

0.000
0.045 0.050 0.055 0.060 0.065 0.070 0.075 0.080 0.085 0.090 0.095
Log of GDP per capita in 1960

The regression results and the graph provide evidence for the convergence prediction of the
Solow-Swan model. This is because the relationship and the effect are negative.

f.)
i. The difference in results may arise from the sample size.
ii. The convergence from the OECD countries might be a conditioning convergence. It
would be that the OECD countries share similar fundamental structures.
Name: Boakye Dankwah ID: 10875470 Date: 13 th August 2021

g.)
It is worth noting that information on R&D is available for all countries.
SUMMARY OUTPUT

Regression Statistics
Multiple R 0.5958
R Square 0.3549
Adjusted R Square 0.3357
Standard Error 0.0113
Observations 70.0000

ANOVA
df SS MS F Significance F
Regression 2.0000 0.0047 0.0024 18.4335 0.0000
Residual 67.0000 0.0086 0.0001
Total 69.0000 0.0133

Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept 0.0048 0.0094 0.5094 0.6122 -0.0140 0.0236 -0.0140 0.0236
Ln(1960) 0.0012 0.0013 0.9219 0.3599 -0.0014 0.0038 -0.0014 0.0038
Ln (Savings % of GDP), 2000 0.0144 0.0026 5.5884 0.0000 0.0093 0.0196 0.0093 0.0196

The differences and similarities in Results:

Similarities:

 Both models are statistically significant (p-value < 0.05)

 The slope of the regression remained positive after conditioning the relationship between
annualized growth rate of GDP per capita and the level of per capita GDP in 1960 on gross
savings in 2000 (% of GDP).

 The graph also continues to have a positive sloped best fit line.

 Therefore, there is still no evidence of convergence in this data.


Name: Boakye Dankwah ID: 10875470 Date: 13 th August 2021
Differences:

 The R-Square has increased from 11% to 35%, showing that the dependent variable (Growth
rate) has been explained better in the second regression model (3.g) when we condition the
relationship on gross savings.

The impact of level of per capita GDP 1960 on annualized growth rate per GDP 1960-2019 has fallen in
the second regression model (3g). From (0.0045 to 0.0012
Name: Boakye Dankwah ID: 10875470 Date: 13 th August 2021

Problem Set 4.

I followed Foster, Greer, and Thorbecke measure to estimate the poverty incidence and depth. From

[ ]
a
1 Z−Y
their Pa indexes of poverty; Pa = ∑ where n= the number of observations, Z=poverty
n Z
line and Y= household per capital expenditure

[ ]
0
Z−Y
Po = ∑ , Poverty incidence
Z

[ ]
1
1 Z−Y
P1 = ∑ , depth of poverty
n Z

Q. a&b.
a&b No. of
[ ] [ ] Incidence Depth
0 1
Z−Y Z−Y
households ∑ Z
∑ Z

Extreme 14009 1870 691.347 13.35% 4.94%

Upper 14009 3773 1545.472 26.93% 11.03%

Poverty

c.

100
Lorenz Curve
90

80

70

60
Equality
%EXP

50
Lorenz
40

30

20

10

0
0 10 20 30 40 50
%Pop 60 70 80 90 100
Name: Boakye Dankwah ID: 10875470 Date: 13 th August 2021

d.
Area under the Lorenz curve 2861.241494
Area b/n the Equality and the Lorenz curve   2138.758506
 

Gini Co-efficient   0.427751701

e.

Extreme Poverty

REGIONS INCIDENCE DEPTH

Upper East 0.44 0.19

Upper West 0.35 0.13

Brong Ahafo 0.09 0.03

Volta 0.02 0.00

Ashanti 0.03 0.01

Northern 0.28 0.10

Greater Accra 0.03 0.01

Central 0.03 0.01

Eastern 0.10 0.03

Upper Poverty

REGIONS INCIDENCE DEPTH

Upper East 0.66 0.34

Upper West 0.60 0.27

Brong Ahafo 0.21 0.07

Volta 0.02 0.04

Ashanti 0.14 0.01

Northern 0.52 0.22

Greater Accra 0.13 0.03

Name: Boakye Dankwah ID: 10875470 Date: 13 th August 2021

Central 0.12 0.03

Eastern 0.27 0.09

f. Rural and Urban

Extreme Poverty
iNCIDENCE DEPTH
Rural 12.67% 4.77%

Urban 0.68% 0.17%

Upper Poverty
iNCIDENCE DEPTH
Rural 23.93% 10.25%

Urban 3.01% 0.78%

Self-employed has the highest incidence of poverty.

g.
From the results, there is no much difference in the inequality level across the regions and the
rural and urbans areas in Ghana. However, the inequality level in the Upper west
Name: Boakye Dankwah ID: 10875470 Date: 13 th August 2021

h. Occupation
Extreme Poverty
Occupation Incidence Depth
Self-Employed-non agric 0.76% 0.20%
Unemployed 1.87% 0.78%
Self employed-agric 7.27% 2.53%
Retired 0.03% 0.01%
Public Employee 0.12% 0.03%
Private 0.72% 0.25%
Other Inactive 2.58% 1.14%

Upper Poverty
Occupation Incidence Depth
Self-Employed-non agric 2.36% 0.72%
Unemployed 3.33% 1.53%
Self employed-agric 2.47% 0.85%
Retired 0.03% 0.02%
Public Employee 0.40% 0.12%
Private 1.97% 0.67%
Other Inactive 4.23% 2.05%