III. Business Cycle Facts Consider the following tables: (2 x 15 pts=30 pts) a. Explain the statistics that are listed in the first row highlighted in yellow. Specifically, explain how are they calculated? b. Comment on the economic significance of the values highlighted in gray in the Tables. Cyclical behavior of U.S. output and income components(deviations from trend of product and income variables, quarterly, 1954-1989) Volatility Cross Correlation of Real GNP with Variable x std.dev.) x(t-5) x(t-4) x(t-3) x(t-2) x(t-1) *(t) x(t+1) x(t+2) x (t+3) x(t+4) x(t+5) Real Gross National Product 1.71 0.03 0.15 0.38 0.63 0.85 1.00 0.85 0.63 0.38 0.15 0.03 Labor Input Hours (Household Survey) 1.47 -0.10 0.05 0.23 0.44 0.69 0.86 0.86 0.75 0.59 0.38 0.18 Employment 1.06 -0.18 -0.04 0.14 0.36 0.61 0.82 0.89 0.82 0.67 0.47 0.25 Hours per Worker 0.54 0.08 0.21 0.35 0.49 0.66 0.71 0.59 0.43 0.29 0.11 0.02 Hours (Establishment Survey) 1.65 0.23 0.07 0.14 0.39 0.66 0.88 0.92 0.81 0.64 0.42 0.21 GNP/Hours (Household Survey) 0.88 0.11 0.21 0.34 0.48 0.50 0.51 0.21 -0.02 -0.25 -0.34 -0.36 GNP/Hours (Establishment Survey) 0.83 0.40 0.46 0.49 0.53 0.43 0.31 -0.07 0.31 0.49 -0.52 0.50 Average Hourly Real Compensation (Business Sector) 0.91 0.30 0.37 0.40 0.42 0.40 0.35 0.26 0.17 0.05 -0.08 0.20 Capital Input Nonresidental Capital Stock* 0.62 0.58 0.61 -0.51 0.48 0.31 -0.08 0.16 0.39 0.56 0.66 0.70 Structures 0.37 0.45 0.51 0.55 0.53 0.44 0.29 0.10 0.09 0.25 0.38 0.45 Producers' Durable Equipment 0.99 0.57 0.58 -0.53 0.41 -0.22 0.02 0.26 0.47 0.62 0.70 0.71 Inventory Stock (nonfarm) 1.65 -0.37 0.33 0.23 0.05 0.19 0.50 0.72 0.83 0.81 0.71 0.53