·Productivity shocks Procyclical bias may be due to: -Labor Hoarding-Labor input is overestimated in a recession.Workers are kept on payroll even though they are not working as hard.Just sitting around waiting for recession to end. Output Mismeasurement-In a recession,workers may produce things that are hard to measure.They might clean the factory,organize inventory,get some training • Productivity shocks • Procyclical bias may be due to: – Labor Hoarding - Labor input is overestimated in a recession. Workers are kept on payroll even though they are not working as hard. Just sitting around waiting for recession to end. – Output Mismeasurement - In a recession, workers may produce things that are hard to measure. They might clean the factory, organize inventory, get some training