This Beveridge curve discourse is so baffling to an outsider. The stylized shape of the curve is plausible from theoretical considerations, but no economist can calculate it from first principles; quantitatively, it is a purely empirical relationship. And while it is a *somewhat* stable relationship, in the short- to medium-term, it isn'…
This Beveridge curve discourse is so baffling to an outsider. The stylized shape of the curve is plausible from theoretical considerations, but no economist can calculate it from first principles; quantitatively, it is a purely empirical relationship. And while it is a *somewhat* stable relationship, in the short- to medium-term, it isn't all *that* stable, shifting uneasily from time to time like the Tigris in its bed. To impute reasons that "explain" these shifts - "skills mismatch", "extended unemployment benefits" - seems already pretty dodgy; how different is that really from the talking heads on business news who "explain" every shift in the market index?
But to say "no, this observation doesn't fit on the historical curve, therefore it is a disequilibrium number, and future observations will soon revert to the old data" is a category error. You can't say that an empirical observation is inconsistent with empirical observations! It is like sticking your head out the window, seeing blue sky and sunshine, and saying "no, that's a mistake, really it ought to be raining."
This Beveridge curve discourse is so baffling to an outsider. The stylized shape of the curve is plausible from theoretical considerations, but no economist can calculate it from first principles; quantitatively, it is a purely empirical relationship. And while it is a *somewhat* stable relationship, in the short- to medium-term, it isn't all *that* stable, shifting uneasily from time to time like the Tigris in its bed. To impute reasons that "explain" these shifts - "skills mismatch", "extended unemployment benefits" - seems already pretty dodgy; how different is that really from the talking heads on business news who "explain" every shift in the market index?
But to say "no, this observation doesn't fit on the historical curve, therefore it is a disequilibrium number, and future observations will soon revert to the old data" is a category error. You can't say that an empirical observation is inconsistent with empirical observations! It is like sticking your head out the window, seeing blue sky and sunshine, and saying "no, that's a mistake, really it ought to be raining."