Владимир Михајловић, Гордана Марјановић

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The stabilization of economic activity represents the basic purpose of macroeconomic policy. In the last few years, the achievement of price stability, or the relatively low and stable inflation rate, has been imposed as the policy’s main goal, in accordance with the recommendations of the so-called New consensus macroeconomics. In line with that, the identification of variables, which determine the inflation rate and cause its changes, is crucial. From its occurrence, the relationship of the Phillips curve provided an explanation of the inflation dynamics based on the movement of different factors, depending on the variant of the curve observed. Hence, the subject of the paper is the presentation and evaluation of the contemporary concepts of the Phillips curve in the context of the application of the efficient stabilization policy. The main objective of the paper is to reconsider the concept’s validity, especially in the conditions of serious economic disorders, such as the Great Recession. The applied analysis indicates that the dominant New Keynesian concept of the Phillips curve can serve for the successful conducting of economic policy, if it is supplemented with the variables of fiscal policy and financial stability policy.


Phillips curve, economic policy, inflation rate, unemployment, Great Recession

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