Introduction Time Series Plots and Definitions Key Correlations

Business Cycle Data in U.S.

Pedro de Araujo

Department of Economics & BusinessColorado College

March 30, 2021

Macroeconomic Theory II - Spring 2021 Business Cycle Data 1/22

Introduction Time Series Plots and Definitions Key Correlations

Some Definitions

1 Business Cycles are fluctuations about trend in real GDP.

2 The turning points in the deviations of real GDP from trendare peaks and troughs.

3 Persistent positive deviations from trend are booms andpersistent negative deviations from trend are recessions.

Macroeconomic Theory II - Spring 2021 Business Cycle Data 2/22

Introduction Time Series Plots and Definitions Key Correlations

Real GDP and HP Filtered Trend

Macroeconomic Theory II - Spring 2021 Business Cycle Data 3/22

Introduction Time Series Plots and Definitions Key Correlations

Deviations from Trend in Real GDP (after WWII)

Macroeconomic Theory II - Spring 2021 Business Cycle Data 4/22

Introduction Time Series Plots and Definitions Key Correlations

Deviations from Trend in Real GDP

Macroeconomic Theory II - Spring 2021 Business Cycle Data 5/22

Introduction Time Series Plots and Definitions Key Correlations

Irregularities in Business Cycles

1 The fluctuations in GDP about trend are quite choppy.

2 There is no regularity in the amplitude of fluctuations in realGDP about trend.

3 There is no regularity in the frequency of fluctuations in realGDP about trend.

Macroeconomic Theory II - Spring 2021 Business Cycle Data 6/22

Introduction Time Series Plots and Definitions Key Correlations

More Definitions

1 If the deviations from trend in a macroeconomic variable arepositively (negatively) correlated with the deviations fromtrend in real GDP, then that variable is procyclical(countercyclical).

2 If a macroeconomic variable is neither procyclical norcountercyclical, it is acyclical.

Macroeconomic Theory II - Spring 2021 Business Cycle Data 7/22

Introduction Time Series Plots and Definitions Key Correlations

Macroeconomic Theory II - Spring 2021 Business Cycle Data 8/22

Introduction Time Series Plots and Definitions Key Correlations

Imports and GDP

Macroeconomic Theory II - Spring 2021 Business Cycle Data 9/22

Introduction Time Series Plots and Definitions Key Correlations

Macroeconomic Theory II - Spring 2021 Business Cycle Data 10/22

Introduction Time Series Plots and Definitions Key Correlations

Imports and GDP

Macroeconomic Theory II - Spring 2021 Business Cycle Data 11/22

Introduction Time Series Plots and Definitions Key Correlations

Macroeconomic Theory II - Spring 2021 Business Cycle Data 12/22

Introduction Time Series Plots and Definitions Key Correlations

Leading Indicators (LEI)

Macroeconomic Theory II - Spring 2021 Business Cycle Data 13/22

Introduction Time Series Plots and Definitions Key Correlations

Components of GDP

Macroeconomic Theory II - Spring 2021 Business Cycle Data 14/22

Introduction Time Series Plots and Definitions Key Correlations

Consumption and GDP

Macroeconomic Theory II - Spring 2021 Business Cycle Data 15/22

Introduction Time Series Plots and Definitions Key Correlations

Investment and GDP

Macroeconomic Theory II - Spring 2021 Business Cycle Data 16/22

Introduction Time Series Plots and Definitions Key Correlations

Labor Market Variables

Macroeconomic Theory II - Spring 2021 Business Cycle Data 17/22

Introduction Time Series Plots and Definitions Key Correlations

Employment and GDP

Macroeconomic Theory II - Spring 2021 Business Cycle Data 18/22

Introduction Time Series Plots and Definitions Key Correlations

Labor Productivity and GDP

Macroeconomic Theory II - Spring 2021 Business Cycle Data 19/22

Introduction Time Series Plots and Definitions Key Correlations

Summary

Macroeconomic Theory II - Spring 2021 Business Cycle Data 20/22

Introduction Time Series Plots and Definitions Key Correlations

Summary

Macroeconomic Theory II - Spring 2021 Business Cycle Data 21/22

Introduction Time Series Plots and Definitions Key Correlations

References

Williamson, Stephen D.: “Macroeconomics,” PearsonAddison-Wesley, 5th ed., 2013

Williamson, Stephen D.: “Macroeconomics,” PearsonAddison-Wesley, 6th ed., 2016

Macroeconomic Theory II - Spring 2021 Business Cycle Data 22/22