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.

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