Consumption of durables is more variable relative to trend than is consumption of nondurables, and consumption of nondurables is more variable relative to trend than is consumption of services. Speculate on why we observe these phenomena, and relate this to the key business cycle facts in Tables 3.1 and 3.2.

Table 3.1:

Table 3.2:

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Correlation Coefficients and Variability of Percentage Deviations from Trend Correlation Standard Deviation (% of S.D. of GDP) Coefficient Consumption 0.77 77 Investment 0.80 301 Employment 0.78 65 Average Labor Productivity 63 0.77 Summary of Business Cycle Facts Variation Cyclicality Lead/Lag Relative to GDP Consumption Procyclical Coincident Smaller Investment Procyclical Coincident Larger Lagging Smaller Employment Real Wage Procyclical Procyclical Average Labor Productivity Procyclical Coincident Smaller