Business cycles: fluctuations about trend in real gross domestic product
Peaks: a relatively large positive deviation from trend
Trough: relatively large negative deviation from trend
Turning points: peaks and troughs in the deviations from trend in real GDP
Amplitude: the maximum deviation from trend
Frequency: the number of peaks in real GDP that occur per year
Boom: a series of positive deviations from trend culminating in a peak
Recession: a series of negative deviations from trend culminating in a trough
Persistent: when real GDP is above trend it tends to stay above trend, and when it is below trend, it
tends to stay below trend.
Time series: typically we look at these time series two at a time, and a good starting point is to plot the
- Macroeconomic variables are measured by time series
-real GDP is measured in a series of quarterly observations over time
Comovement: macroeconomic variables fluctuate together in patterns that exhibit strong regularities.
Procyclical: an economic variable’s deviations from trend are positively correlated with the