14. Table 2: Cyclical Behavior of the US Economy: Deviations from Trend of Expenditure Components, 1954:I-1991:II Cross-Correlation of Output with: Variabl e SDX(-3)X(-2)X(-1)XX(+1)X(+2)X(+3) GDP1.72.38.63.851.63.38 C1.27.57.72.82.83.67.46.22 I8.24.38.59.79.91.76.50.22 G2.04-.03-.01.04.08.11.16 Exp5.53-.29-.10.15.37.50.54 Imp4.88.31.45.62.72.71.52.28 Data Source: NIPA. All data are deflated and HP filtered

15. Table 1: Cyclical Behavior of U.S. Labor Market Aggregates, 1954:I-1991:II Cross-Correlation of Real GDP with: Variable Volatilit y (%SD) X(-5)X(-4)X(-3)X(-2)X(-1)X X(+1 ) X(+2 ) X(+3 ) X(+4 ) X(+5 ) Real Gross Domestic Product 1.72-.02.16.38.63.85.63.38.16-.02 Hours (Household Survey)1.49-.10.05.25.46.70.86.85.74.58.38.17 Employment1.09-.17-.03.16.38.63.83.88.80.65.46.25 Hours per Worker0.54.07.20.36.49.64.70.58.42.28.12-.02 GDP/Hours0.87.12.23.33.47.50.51.22-.01-.24-.32-.34 Average Hourly Real Compensation (Business Sector) 0.93.35.39.41.43.41.35.25.16.05-0.7-.18 Real Employee Compensation (NIPA)/Hours (Household Survey) 0.65-.11 -.13.06.02.10.13.14.10.08.04 Cross-Correlation of *: Employment and Average Labor Productivity** (X) 1.09.73.68.57.35.09-.15-.32 Vacancies and Unemployment (X) 12.54-.36-.61-.82-.95-.93-.77-.54 GNP and Labor Share (X)1.07-.61-.73-.78-.74-.48-.22-.00 Source: Finn E. Kydland (1995), (*) Source: M. Merz (1995) using CITIBASE data for the period 1959:I-1988:II, (**) Average Labor Productivity is defined as Real GNP over Employment

16. 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

17. 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

18. 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