Intermediate Macroeconomics ECON 3020
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This 12 page Class Notes was uploaded by Nola Williamson on Monday September 21, 2015. The Class Notes belongs to ECON 3020 at University of Virginia taught by Chris Otrok in Fall. Since its upload, it has received 11 views. For similar materials see /class/209767/econ-3020-university-of-virginia in Economcs at University of Virginia.
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Date Created: 09/21/15
Outline of Chapter 3 A Timing and Comovement B US Data Business Cycles 3 Facts Deviations from trend tend to be persistent No regularity in amplitude of uctuations No regularity in the frequency of uctuations time between peaks and troughs varies Implications Persistence implies forecastability Depth of a recession is hard to predict Turning points hard to predict Comovement all sectors of the economy move together to some degree both inputs and outputs Procyclical a macroeconomic variable Whose deviations from trend are positively correlated with deviations from trend in real GDP Countercyclical deviations from trend are negatively correlated with deviations from trend in real GDP Acyclical neither pro nor counter cyclicai 0 Timing Leading variable helps predict future GDP Lagging variable GDP helps predict this variable Coincident variable correlated with GDP but no prediction power in either direction Relative Volatility some variables fall more in recessions than others Important Business Cycle Regularities Consumption and Investment are Procyclical Consumption is less variable and investment more variable than output Consumption is a coincident variable investment leads output The price level is countercyclical Money Supply is procyclical and tends to lead output 3 Real GDIP Trend 39Il39ume Percentage Deviation From Trend Percentage Deviations from Trend in Real GDP from 19472003 8 1940 1950 1960 1970 1980 1990 2000 2010 Year 5 Percentage Deviation From Trend Percentage Deviations from Trend in Real Consumption black line and Real GDP colored line Consum ption 1950 1960 1970 1980 Year 1990 2000 2010 6 Percentage Deviation From Trend Percentage Deviations from Trend in Real Investment black lineand Real GDP colored line 20 Investment 30 1940 1950 1960 1970 1980 1990 2000 2010 Year 7 Percentage Deviation From Trend 8 1940 1950 Price Level and GDP Price Level 1960 1 970 1980 Year 1990 2000 2010 Percentage Deviation From Trend Percentage Deviations from Trend in Employment black line and Real GDP colored line 6 1940 1950 1960 1970 1980 Year 1990 2000 2010 Percentage Deviations from Trend in Average Labor Productivity black line and Real GDP colored line Productivity Percentage Deviation From Trend 76 1940 1950 1960 1970 1980 1990 2000 2010 Year 10 Percentage Deviation From Trend Percentage Deviations from Trend in the Money Supply black line and Real GDP colored line Money Supply GDP 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 11 Correlation Coef cients and Variability of Percentage Deviations from Trend Correlation Coef cient Standard Deviation ofSD ofGDP Consumption 076 756 Investment 083 469 2 Price Level O26 576 Money Supply 038 779 Employment 08 593 Average Labor Productivity 083 628
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