101-2010-L5

101-2010-L5 - Econ101 Lecture5 BusinessCycle Measurement

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Econ 101 Lecture 5 Business Cycle  Measurement Consumption and Leisure 
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n PLEASE HAND IN PS1 AT THE  END OF THE LECTURE n PS2 will be posted today, due next  Wednesday
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What to read n Williamson, chapter 3 (today) n Williamson, chapter 4, pp. 102-112  (today) n Williamson, chapter 4, pp. 112-123  (Wednesday) n We’ll skip Chapter 2, 59-64
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Business Cycle Measurement n Look at short run fluctuations in output and  other variables n Peak : Maximum positive deviation from trend  n Trough : Maximum negative deviation from  trend Business cycles are fluctuations around the  trend
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Figure 3.1  Idealized Business Cycle
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Recessions n Economic Definition: n A negative deviation from the trend n Newspaper Definition: n A decline in GDP for two or more  consecutive quarters n Not the same!
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Figure 3.2  Percentage Deviations from Trend in  Real GDP from 1947--2006
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Time series: what to look for? 1. variability  of fluctuations (are the  deviations relatively large or not?) 2. comovement  (do any two series move  together?) n n. Robert Lucas: “ with respect to  comovement business cycles are all alike
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Consumption
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Investment
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Price level
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Money supply
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Employment Procyclical ( ρ = 0 . 80 ) Lagging Less volatile ( σ E = 0.60 Y )
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Productivity (GDP/E)
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What Have We Learned? n
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This note was uploaded on 12/26/2011 for the course ECON 101 taught by Professor Dumbass during the Fall '08 term at UCSB.

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101-2010-L5 - Econ101 Lecture5 BusinessCycle Measurement

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