Abstract
The Phillips curve has evolved into a systematic instrument that elaborates on macroeconomic analysis, showing the relationship between unemployment and inflation, illustrating the trade-off between achieving full capacity engagement and maintaining price stability. The New Keynesian Phillips curve presumes that expectations of inflation are neither adaptive nor rational, as posited in Lucas's theory. Consequently, a New Keynesian Phillips curve has emerged, distinct from the curve modeled by Phelps and Friedman. In 2023, inflation in the Republic of Serbia (Serbia) peaked at 16.2% in March, gradually declining to 10.2% by September, aided by reduced pressure from food prices. Projected inflation is expected to decelerate further by the end of 2023 and into the following year, influenced by effects and tighter financing conditions. While some increases in 2023 are evident, approximate yearly inflation is expected to be in single digits in 2024, returning within the central bank's target in two years. This paper will present the New Keynesian Phillips curve in the Republic of Serbia (Serbia), as well as macroeconomic predictions for the country.
Publisher
Centre for Evaluation in Education and Science (CEON/CEES)
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