We have measured average labour productivity in this chapter as Y/N, where Y is real GDP and N is employment. The business cycle facts concerning employment relate to how the denominator N comoves with the numerator Y, and those concerning average labour productivity relate to how Y/N comoves with Y. Explain how the business cycle facts concerning employment and average labour productivity in Tables 3.1 and 3.2 are consistent.

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TABLE 3.1 Correlation Coefficients and Variability of Percentage Deviations from Trend Correlation Coefficient (GDP) Std. Dev. (% of S.D. of GDP) 81% Consumption Investment Employment Average labour productivity 0.79 340 0.69 81 0.80 63 0.64 TABLE 3.2 Summary of Business Cycle Facts Variability Relative to GDP Smaller Larger Smaller Cyclicality Lead/Lag Coincident Coincident Lagging Consumption Investment Employment Real wage rate Average labour Procyclical productivity Procyclical Procyclical Procyclical Procyclical Coincident Smaller