Gauti Eggertsson is an Icelandic-born economist at Brown University who has a knack for describing interesting economic phenomena. He identified and named the “paradox of toil,” which says that there can be less work in the aggregate because everyone wants to work more.Eggertsson has a new phrase, which he minted last month at the annual conclave of economists and central bankers in Jackson Hole, Wyo. It’s the “Beveridge threshold.” It’s no academic obscurity. If Eggertsson is right, the existence of the Beveridge threshold explains how inflation has fallen rapidly without much of a rise in unemployment — and why any further decline in inflation may not be as painless.I asked Eggertsson last week about his latest coinage. “That was something I am quite proud of having introduced just now,” he said. “I’m hoping it will catch on because I think it’s a nice phrase.”Eggertsson contributed the phrase to a paper with Pierpaolo Benigno of the University of Bern in Switzerland that he presented in Jackson Hole. According to their new framework, they wrote, the risk of a jump in unemployment at this stage is probably greater than the risk of a jump in inflation, “suggesting policy should ease going forward.” That accords with what Jerome Powell, the Fed chair, signaled is going to happen when the rate-setting Federal Open Market Committee meets later this month.Eggertsson’s Beveridge threshold is named after William Henry Beveridge, a British economist and reformer who was born in 1879 in what today is Bangladesh and died in 1963 in Oxford. He advocated social insurance for Britons “from the cradle to the grave.” (Like many intellectuals of his era, he was also a eugenicist.)Today Beveridge is best known, oddly enough, for something that’s not actually his: the Beveridge curve, which describes the inverse relationship between the unemployment rate and the job vacancy rate. It’s intuitive: When the labor market is tight and it’s easy to find a job, there are many job openings and a low unemployment rate. Vice versa for a loose labor market.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe.
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