# Co-movement: cyclicality, variability, Timing

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What is cyclicality, variability and timing?
Cyclicality: correlation betwen deviations from trend in GDP and deviations from trend in other variables, Variability:the extent to which variables present greater or less amplitude in comparison to GDP, timing: leading/lagging/coincident
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How can cyclicality be measured statistically?
By using the correlation coefficient: +1 is perfectly +ve, -1 perfectly negative and 0 exhibits no correlation
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How can variability be calculated statistically?
By diving the standard deviation of % deviations from trend in variable by the standard deviation of % deviations from the trend in GDP
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What are the components of GDP? What are their proportions in the US economy?
Y (GDP) = C (consumption) + I (investment) + G (gov. expenditure) + (X - M) (net imports). C ~ 70%, I ~ 15%, G ~ 20% and X - M ~ 5%
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What are the real variables? What are their co-movements in relation to GDP?
Consumption: pro-cyclical, 3/4 variability, coincident. Investment: pro-cyclical, almost x4 variability, coincident. Government expenditure: no real patterns
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## Other cards in this set

### Card 2

#### Front

How can cyclicality be measured statistically?

#### Back

By using the correlation coefficient: +1 is perfectly +ve, -1 perfectly negative and 0 exhibits no correlation

### Card 3

#### Front

How can variability be calculated statistically?

### Card 4

#### Front

What are the components of GDP? What are their proportions in the US economy?

### Card 5

#### Front

What are the real variables? What are their co-movements in relation to GDP?