7.22. Table 7.11 gives data for the manufacturing sector of the Greek economy for the period 1961–1987.
TABLE 7.10 DEMAND FOR MONEY IN THE UNITED STATES, 1980–1998
| Observation | GDP | M2 | CPI | LTRATE | TBRATE |
| 1980 | 2795.6 | 1600.4 | 82.4 | 11.27 | 11.506 |
| 1981 | 3131.3 | 1756.1 | 90.9 | 13.45 | 14.029 |
| 1982 | 3259.2 | 1911.2 | 96.5 | 12.76 | 10.686 |
| 1983 | 3534.9 | 2127.8 | 99.6 | 11.18 | 8.630 |
| 1984 | 3932.7 | 2311.7 | 103.9 | 12.41 | 9.580 |
| 1985 | 4213.0 | 2497.4 | 107.6 | 10.79 | 7.480 |
| 1986 | 4452.9 | 2734.0 | 109.6 | 7.78 | 5.980 |
| 1987 | 4742.5 | 2832.8 | 113.6 | 8.59 | 5.820 |
| 1988 | 5108.3 | 2995.8 | 118.3 | 8.96 | 6.690 |
| 1989 | 5489.1 | 3159.9 | 124.0 | 8.45 | 8.120 |
| 1990 | 5803.2 | 3279.1 | 130.7 | 8.61 | 7.510 |
| 1991 | 5986.2 | 3379.8 | 136.2 | 8.14 | 5.420 |
| 1992 | 6318.9 | 3434.1 | 140.3 | 7.67 | 3.450 |
| 1993 | 6642.3 | 3487.5 | 144.5 | 6.59 | 3.020 |
| 1994 | 7054.3 | 3502.2 | 148.2 | 7.37 | 4.290 |
| 1995 | 7400.5 | 3649.3 | 152.4 | 6.88 | 5.510 |
| 1996 | 7813.2 | 3824.2 | 156.9 | 6.71 | 5.020 |
| 1997 | 8300.8 | 4046.7 | 160.5 | 6.61 | 5.070 |
| 1998 | 8759.9 | 4401.4 | 163.0 | 5.58 | 4.810 |
Notes: GDP: gross domestic product ($ billions) M2: M2 money supply.
CPI: Consumer Price Index (1982–1984 = 100).
LTRATE: long-term interest rate (30-year Treasury bond).
TBRATE: three-month Treasury bill rate (% per annum).
Source: Economic Report of the President, 2000, Tables B-1, B-58, B-67, B-71.
TABLE 7.11 GREEK INDUSTRIAL SECTOR
Capital-to-labor
| Observation | Output* | Capital | Labor† | ratio |
| 1961 | 35.858 | 59.600 | 637.0 | 0.0936 |
| 1962 | 37.504 | 64.200 | 643.2 | 0.0998 |
| 1963 | 40.378 | 68.800 | 651.0 | 0.1057 |
| 1964 | 46.147 | 75.500 | 685.7 | 0.1101 |
| 1965 | 51.047 | 84.400 | 710.7 | 0.1188 |
| 1966 | 53.871 | 91.800 | 724.3 | 0.1267 |
| 1967 | 56.834 | 99.900 | 735.2 | 0.1359 |
| 1968 | 65.439 | 109.100 | 760.3 | 0.1435 |
| 1969 | 74.939 | 120.700 | 777.6 | 0.1552 |
| 1970 | 80.976 | 132.000 | 780.8 | 0.1691 |
| 1971 | 90.802 | 146.600 | 825.8 | 0.1775 |
| 1972 | 101.955 | 162.700 | 864.1 | 0.1883 |
| 1973 | 114.367 | 180.600 | 894.2 | 0.2020 |
| 1974 | 101.823 | 197.100 | 891.2 | 0.2212 |
| 1975 | 107.572 | 209.600 | 887.5 | 0.2362 |
| 1976 | 117.600 | 221.900 | 892.3 | 0.2487 |
| 1977 | 123.224 | 232.500 | 930.1 | 0.2500 |
| 1978 | 130.971 | 243.500 | 969.9 | 0.2511 |
| 1979 | 138.842 | 257.700 | 1006.9 | 0.2559 |
| 1980 | 135.486 | 274.400 | 1020.9 | 0.2688 |
| 1981 | 133.441 | 289.500 | 1017.1 | 0.2846 |
| 1982 | 130.388 | 301.900 | 1016.1 | 0.2971 |
| 1983 | 130.615 | 314.900 | 1008.1 | 0.3124 |
| 1984 | 132.244 | 327.700 | 985.1 | 0.3327 |
| 1985 | 137.318 | 339.400 | 977.1 | 0.3474 |
| 1986 | 137.468 | 349.492 | 1007.2 | 0.3470 |
| 1987 | 135.750 | 358.231 | 1000.0 | 0.3582 |
*Billions of Drachmas at constant 1970 prices
†Thousands of workers per year.
Source: I am indebted to George K. Zestos of Christopher Newport University, Virginia, for the data.
a. See if the Cobb–Douglas production function fits the data given in the table and interpret the results. What general conclusion do you draw?
b. Now consider the following model:
Output/labor = A(K/L)β eu
where the regressand represents labor productivity and the regressor rep- resents the capital labor ratio. What is the economic significance of such a relationship, if any? Estimate the parameters of this model and inter- pret your results.