### What does the Beveridge curve tell us about the likelihood of a soft landing? Accessible Data

##### Figure 1. Beveridge curves

The figure shows five curves in vacancy and unemployment space (with vacancies on the Y axis and unemployment on the X axis). Four of the curves are generated by a model, and one of the curves is generated by fitting a curve to data on vacancies and unemployment. Each of the model-generated curves assumes a constant separations rate, but each curve assumes a different separations rate. Curves assuming a higher constant separations rate are shifted to the right, illustrating that a higher separations rate is consistent with a higher level of unemployment. All four model-generated curves are more convex than the fitted curve because they hold the separations rate and matching efficiency constant, whereas in the data the separations rate and matching efficiency change over time. As a result, the fitted line is less convex (and less steep) than the model-generated curves.

Source: Author's calculations.

##### Figure 2. Stylized Beveridge curve

The figures shows one stylized (i.e. drawn) convex Beveridge curve in vacancy and unemployment space (with vacancies on the Y axis and unemployment on the X axis). The figure also shows two rays drawn from the origin. The ray with a steeper slope (and an angle much greater than 45 degrees) corresponds to a relatively high vacancy-to-unemployment ratio and is labeled “High Vacancy-Unemployment Ratio”. The ray with a moderate slope (and an angle of about 45 degrees) corresponds to an average vacancy-to-unemployment ratio and is labelled “Average Vacancy-Unemployment Ratio”. At the points where each ray intersects the Beveridge curve, a short line tangent to the Beveridge curve is drawn. The tangent line where the “High Vacancy-Unemployment ratio” ray intersects the Beveridge curve has a noticeably steeper slope than the tangent line where the “Average Vacancy-Unemployment Ratio” ray intersects the Beveridge curve, illustrating that the change in unemployment for a given change in vacancies will be smaller if the vacancy-unemployment ratio is higher.