ECO 3152 Lecture Notes - Lecture 3: Phillips Curve, Macroeconomics, Standard Deviation
8 Dec 2017
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Document Summary
The primary defining feature of business cycles is that they are fluctuations about trend in real. Persistence: when real gdp is above trend, it tends to stay above trend, and when it"s below, it tends to stay below. Persistence is important in terms of forecasting over the short run. It confidently predicts that if real gdp is currently below (above) trend, it will be below (above) trend in several months from now. Other than being persistent, however, the deviations from trend in real gdp are actually quite irregular: The time series of deviations from trend in real gdp is quite choppy; There is no regularity in the amplitude of fluctuations in real gdp about trend. Some of the peaks and troughs represent large deviations from trend, whereas other peaks and troughs represent small deviations from trend; There is no regularity in the frequency of fluctuations in real gdp about trend.
