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The Stylized Facts about the Business Cycle

The Stylized Facts about the Business Cycle. Output fluctuations in GDP are persistent Expenditure consumption is procyclical and less volatile than GDP investment is procyclical and 5 times as volatile as GDP government expenditures are acyclical Productivity

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The Stylized Facts about the Business Cycle

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  1. The Stylized Facts about the Business Cycle • Output • fluctuations in GDP are persistent • Expenditure • consumption is procyclical and less volatile than GDP • investment is procyclical and 5 times as volatile as GDP • government expenditures are acyclical • Productivity • the average output per hour of work is somewhat procyclical and leads the cycle

  2. The Stylized Facts about the Business Cycle • Labor Markets • employment volatility accounts for 2/3 of the volatility of total hours • hours-per-worker volatility accounts for 1/3 of the volatility of total hours • employment is procyclical lags the cycle • hors-per-worker are procyclical and lead the cycle • total hours are procyclical and almost as volatile as GDP

  3. References • Chapters 2 and 3 in Williamson • Check-out the website of the National Bureau of Economic Research http://www.nber.org • Check-out the book "Frontier of Business Cycle Research," ed. T. Cooley, 1995, Princeton University Press

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