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Finance, Monetary Policy and the Institutional Foundations of the Phillips Curve

Argitis, Georgios; Dafermos, Yannis


Georgios Argitis

Yannis Dafermos


The purpose of this paper is to examine the influence of financial commitments on the short-run Phillips curve, under different institutional structures of the labour and product market, degrees of euphoria and ratios of firms' to workers' outstanding debt. We develop a Post-Keynesian conflicting-claims model that explicitly incorporates the impact of workers' and firms' financial commitments on distribution conflict and inflation. We propose different versions of the short-run Phillips curve for a debt-financed economy. We explore the impact of monetary policy on the shape and the position of the Phillips curve. We show that the inflation effects of monetary policy cannot be identified without prior knowledge about the institutional and financial structures of the economy, as well as about borrowers' desired margins of safety. © 2013 Taylor & Francis.


Argitis, G., & Dafermos, Y. (2013). Finance, Monetary Policy and the Institutional Foundations of the Phillips Curve. Review of Political Economy, 25(4), 607-623.

Journal Article Type Article
Publication Date Oct 1, 2013
Journal Review of Political Economy
Print ISSN 0953-8259
Electronic ISSN 1465-3982
Publisher Taylor & Francis (Routledge)
Peer Reviewed Peer Reviewed
Volume 25
Issue 4
Pages 607-623
Keywords finance, monetary policy, institutional foundations, Phillips curve
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