Part A: The Cost of Living

1- We can see it clearly that there exists a positive trend for hourly nominal wages
of males and females of Saskatchewan in Wholesale and retail trade. The growth
is positive and decent along the time. Whereas we can see a clear difference
between the wages of men and women from the start. The wages for males start
at 12.94, while for females it’s 9.57. And this trend of a difference in wages
continues to prevail.
Looking at the level of fluctuations, so we can’t see any kind of high fluctuations in
the wages, other than a constant positive growth throughout years.

Hourly nominal wage for males & females

30

25

20

15

10

0
1995 2000 2005 2010 2015 2020 2025

Males Females

2- Looking at the data for 2002, the first thing we notice is that the CPI value for
this year is 100, which means that the value of inflation has neither increased nor
decreased. So the data for real wages and for nominal wages for both males and
females is same for year 2002. We can see that as there is no change in the real
wages for both, so their living standards remained same for year 2002. The trend
 for year 2002 for difference in nominal and real wages will be a zero, showing no
change in vale of wages.

3- After fitting a linear trend we can see the growth of wages for both males and
females with constant rate. No wonder that still male stay at higher wage level as
compare to females. Indeed there is another interesting thing to notice from the
coefficients of the equations for linear trends that the average annual change for
the hourly real wage on average for males is approximately 0.2437 real per capita
GDP per year. The average annual change for the hourly real wage for females is
exactly 0.2183 real per capita GDP per year.

Real wages for males & females

25

20
f(x) = 0.243746315515029 x − 472.352928104095

15
f(x) = 0.21833320294395 x − 425.578210673812

10

0
1995 2000 2005 2010 2015 2020 2025

Real wages males Linear (Real wages males) Linear (Real wages males)
Real wages females Linear (Real wages females) Linear (Real wages females)
 4- We can see at the graph below for the cyclical components and their co-
movement. We can witness a strong positive co-movement. This is because of the
wage trend which chow a positive growth for both males and females.

0.009

0.008
cyclical components of real wages for females

0.007

0.006

0.005

0.004

0.003

0.002

0.001

0
0.007 0.0075 0.008 0.0085 0.009 0.0095 0.01

cyclical components of real wages for males

 Part B: Business Cycle, Growth and
Inequality
1-

I. EGY for Egypt

II. SLE for Sierra Leone
III. DEU for Germany
IV. DZA for Algeria

2- Looking at the real GDP/capita data we can surely say that there is a decent
positive trend for these countries. In case of Egypt we can see a clear positive
growing trend over time. For Germany the case is same but growth isn’t same as
of Egypt, though numerically Germany has higher per capita than Egypt, but
5

4.5

3.5
Log Real GDP per capita

3
Log EGY
2.5 Log SLE
Log DEU
2 Log DZA

1.5

0.5

0
1975 1980 1985 1990 1995 2000 2005 2010 2015
 growth is different. The case of Sierra Leone and Algeria are bit different. In case
of Algeria we can see a slight downward trend in 90’s, but again it gained same
value in 2000’s. The same case is for Sierra Leone, which got a dip in 90’s, but
again gained its value back afterwards. Looking at average so we can say that
there isn’t any sign of big decline or downward trend in GDP/capita for any of four
countries. At some time they lost some value, but again were able to gain it back
on track. There isn’t any sign for any macroeconomic shift, but some minor
fluctuations in values over the time.

3- From the chart, we can see that there is some comovement between the
business cycles of the different countries, but it is not consistent over time.

Cyclical component of each series expressed in logs using a quadratic trend

1.4

1.2

0.8

0.6

0.4

0.2

0
1975 1980 1985 1990 1995 2000 2005 2010 2015

EGYPT Sierra Leone Germany Algeria

Specifically, we observe the following:
EGY and SLE seem to have positive comovement in the early 1980s, but then
diverge in the mid-1980s and again in the early 1990s. There is no clear pattern of
comovement after that.
EGY and DZA have negative comovement in the early 1980s, but then become
positively correlated in the mid-1980s and early 1990s. There is no clear pattern
of comovement after that.
SLE and DEU have positive comovement in the early 1980s, but then diverge in
the mid-1980s and again in the early 1990s. There is no clear pattern of
comovement after that.
DZA and DEU have positive comovement in the early 1980s, but then diverge in
the mid-1980s and again in the early 1990s. There is no clear pattern of
comovement after that.
These patterns of comovement are not easily explained by the trading
relationships between the countries. For example, EGY and SLE do not have much
trade between them, but they still show some positive comovement in some
periods. Similarly, DZA and DEU have strong trade ties, but they do not always
move in the same direction.
We do observe some common periods of recession, such as the early 1980s and
the late 2000s. However, these do not appear to be world-wide recessions, as
some countries (such as DEU) seem to be less affected than others.
Overall, the cyclical components of the log series show some comovement
between the different countries, but the patterns are not consistent over time
and cannot be easily explained by trade relationships.
4- Based on the given data, it is difficult to determine conclusively whether the
four countries are converging to each other. However, we can make some general
observations based on the scatter plot with the 1970 real per capita GDP's
expressed in logs on the x-axis and the average growth rates on the y-axis.
First, we observe that there is a significant variation in real per capita GDP
between the four countries in 1970. Germany had the highest real per capita GDP
(4.173), while Sierra Leone had the lowest (3.11). This suggests that there may be
significant differences in the starting points of these countries' economic
development, which could impact their ability to converge.
Second, we observe that there is also significant variation in the average annual
growth rates between the four countries. Egypt had the highest average annual
growth rate (0.597), while Sierra Leone had the lowest (0.032). This suggests that
there may be differences in the economic policies, institutions, or other factors
that contribute to economic growth in each of these countries.
Based on these observations, we can speculate that there may be some
convergence occurring between these countries, as the countries with lower
initial levels of real per capita GDP (such as Egypt and Algeria) appear to have
higher average annual growth rates. However, we would need to conduct further
analysis, with a larger sample size and over a longer time period, in order to
determine definitively whether these countries are converging to each other in
terms of economic growth.
 0.7
1970 real per capita GDP’s expressed in logs

0.6

0.5

0.4

0.3

0.2

0.1

0
2.8 3 3.2 3.4 3.6 3.8 4 4.2 4.4
average growth rates

When we consider the level of education, we see that Algeria and Germany have
higher levels of educational attainment compared to Egypt and Sierra Leone.
According to the World Bank, in 2018, the percentage of the population aged 25
and above with a tertiary education was 13% in Algeria and 30% in Germany,
compared to 7% in Egypt and 1% in Sierra Leone. This suggests that education has
played a significant role in the growth of Algeria and Germany and may explain
why they are converging faster than Egypt and Sierra Leone.
Additionally, life expectancy can also impact a country's economic growth. In
2017, Germany had a life expectancy of 80 years, which is one of the highest in
the world, while Sierra Leone had a life expectancy of only 52 years. This
difference in life expectancy could be due to factors such as differences in
healthcare access and quality, nutrition, and sanitation. Higher life expectancies
may indicate a healthier and more productive population, which can contribute to
economic growth.
Furthermore, economic freedom can impact a country's ability to converge with
others in terms of economic growth. In the 2021 Index of Economic Freedom,
Germany and Algeria ranked 29th and 171st respectively, while Egypt and Sierra
Leone ranked 130th and 175th respectively. Higher scores on the index indicate a
more favorable business environment, lower levels of corruption, and greater
respect for property rights, which can promote economic growth. Therefore,
Germany may have a more conducive environment for economic growth than
Algeria, while Egypt and Sierra Leone may face greater challenges in this regard.
In summary, factors such as education, life expectancy, and economic freedom
can impact a country's ability to converge with others in terms of economic
growth. Higher levels of human development and greater economic freedom may
be better positioned to experience faster growth and converge with other
countries.

5- for 1980
In histogram for 1980 we can see that more of the real GDP per capitas for
countries lies in 10000 Bin, which means that for more than 100 countries their
real GDP per capita lies in category of 10000. And a very small or we can say
negligible number of countries lies in Bin above 30 to 40 thousands.
On the other hand if we analyze the histogram for 2012, we can see that the
income inequality among countries has decreased as compare to 1980. Now here
may be only 70 countries lie in Bin of 10000, and a good number of countries also
lie in range of 30 to 40 thousands of real GDP per capita. The proportion of poor
countries has decreased over the time period of 1980 to 2012.

For 2012
6- These histograms of Log form depict the results much better. This huge spread
in data is due to small log differences, which make large differences in 10000s. We

can notice more fluctuations in data for both years here, but eventually these
histograms are also depicting the same sense that previous histograms did. We
see an improvement in the conditions and living standards of the poor countries
over the time period.