Chapter 8
description
Transcript of Chapter 8
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Chapter 8Business Cycle Facts
pp. 276-298 only.
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Introduction Business Cycle Facts
What is a business cycle? We present an organized discussion about facts
that characterize business cycles in the U.S.
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What are Business Cycles? Business cycles refer to fluctuations in
aggregate economic activity (real GDP is the “reference” variable).
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Characteristics of Business Cycles Phases of expansion and contraction Cycles occur across multiple
sectors/industries at the same time Variables are related by co-movements Cycles are recurrent, but not regular Cycles are persistent
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Figure 8.1 A business cycle
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Business Cycle Facts The description of regular co-movements
constitutes what we call business cycle facts.
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Characterizing Co-movements Business cycle facts are best described by
characterizing co-movements Coincident, leading and lagging variables Procyclical, countercyclical, acyclical variables The amplitude of fluctuations is also useful in
characterizing business cycle facts.
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Figure 8.2 Cyclical behavior of the index of industrial production
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Figure 8.3 Cyclical behavior of consumption and investment
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Figure 8.4 Cyclical behavior of civilian employment
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Figure 8.5 Cyclical behavior of the unemployment rate
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Figure 8.6 Average labor productivity and the real wage
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Figure 8.7 Cyclical behavior of nominal money growth and inflation
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Figure 8.8 Cyclical behavior of the nominal interest rate
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Figure 8.9 Industrial production indexes in six major countries
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Where Do We Go from Here? Business cycle facts suggest regularities that
we hope to explain with theory.
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The End