Originally Posted by FD
The Beveridge curve shows a fairly stable empirical relationship between job openings and unemployment. There is nothing political about it, and there is really no theory behind it either, it just shows over time a stable relationship in the data between two macroeconomic aggregates. The other you might be interested in is "Okun's Law" which shows a 2:1 relationship between GDP growth rates and changes in employment.
Both the Beveridge curve and Okun's Law have held up fairly well in this recession, suggesting that they are A) good predictors and that B) there is nothing particularly unusual about hiring/firing in this recession and recovery, as some have argued.
Here's the flaw though, the macroeconomic aggregate model itself. There really is no such thing in reality. This is why Keynesian economics is socialistic. Same with GDP which is a phony and flawed statistic., 40% of which is is govt spending. Microeconomics is more valid and represents markets more. Markets are fragmented and even regional. Markets always have the last say, not some central economic steering macro model from some national govt.
Krugman has refered to “Okun’s Law” too. This really isn't a “law” at all, but just another proposition based upon government-created aggregates.