EcoFin Research Papers

This paper develops an industry-based perspective on the Phillips Curve, arguing that the inflation–unemployment nexus varies systematically across sectors due to differences in labor intensity, market power, pricing flexibility, and moral or regulatory constraints. While the traditional Phillips Curve assumes a homogeneous transmission from labor market slack to inflation, modern economies are increasingly characterized by sectoral asymmetries. In labor-intensive industries such as manufacturing and personal services, wage pressures transmit strongly into prices, generating a steep Phillips relationship. In contrast, capital-intensive, digital, or morally constrained industries— including information technology and sin-related sectors—exhibit weak or unstable inflation–unemployment linkages due to pricing power, non-labor cost dominance, reputational considerations, and demand inelasticities. Integrating sectoral real marginal cost composition into a hybrid New Keynesian Phillips Curve framework, the paper provides a conceptual foundation for understanding why aggregate Phillips Curve estimates appear flattened. The findings imply that monetary policy transmission is inherently sector-specific and that uniform stabilization policies may produce uneven inflationary outcomes across industries.

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Sovbetov, Y., & Kaplan, M. (2019b). Empirical examination of the stability of Expectations-Augmented Phillips Curve for developing and developed countries. Theoretical and Applied Economics, 26(2/619), 63-78.

Sovbetov, I. (2025a). The hybrid Phillips curve and inflation in post-Soviet Central Asia and the South Caucasus. Post-Communist Economies, 37(8), 1149-1171. https://doi.org/10.1080/14631377.2025.2576203

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Sovbetov, I. (2025c). Inflation dynamics and real marginal cost decomposition: A cross-country analysis of the hybrid NKPC. SSRN Working Paper. https://ssrn.com/abstract=6075832

Sovbetov, I. (2025b). Financial price of sin stocks across religions. Journal of Business Ethics. https://doi.org/10.1007/s10551-025-06072-z