@phdthesis{8768269,
  abstract     = {{The Global Financial Crisis (GFC) and the subsequent Covid-19 economic shock fed expectations of a radical overhaul of the set of economic ideas that have ruled (macro)economic policymaking since the 1970’s. Monetary policy especially saw a spectacular shift in new policies that were adopted. When nominal interest rates hit the zero lower bound, central banks of the Advanced Market Economies (AME) were forced to explore a broad range of new and rather unconventional policies. In terms of monetary policymaking the past decade and a half is marked by experimentation and innovation. Central banks’ role in the economy has massively expanded and new problems and responsibilities were entrusted upon them. 

This has come with new challenges. Since the start of the GFC and up until the Covid-19 economic shock, inflation has been persistently below target despite monetary policy being extremely accommodative. Seemingly signaling a chronical inability to control the level of inflation, this undermined the credibility of central banks. The coming climate crisis, in addition, has confronted AME central bankers with a ‘green policy dilemma’: should they engage with climate change and risk jeopardizing the consensus approach to monetary policy (focused solely on price stability) or should they refuse to do so and risk jeopardizing financial stability? These challenges have put the dominant paradigm of modern central banking under increasing stress.

An unsettled issue is whether these multiple crises and new challenges have also led to a genuine ‘policy revolution’ or a true ‘paradigmatic shift’ in monetary policy-making. This dissertation will answer this question by analyzing AME central banks’ policy reactions to both the financial and Covid-crisis and the new challenges of lowflation and climate change. It will examine what these reactions have meant for the survival of the current macro-economic regime and will develop a more general theory on the potential drivers and barriers of radical policy change in monetary pol-icy. 

This is done by developing an idiosyncratic analytical framework that departs from Peter Hall’s classic framework on policy paradigms. By relying too heavily on the work of Thomas Kuhn, it is argued, Hall’s framework restricts the possible types of policy change by allowing only for slow incremental change (as part of ‘normal policymaking’) or a radical rupture or full-blown paradigm shift. Our alternative frame-work, in contrast, starts from the work of Imre Lakatos’ conception of paradigms or research programs as basically consisting of a set of tenacious ‘hard core beliefs’ that cannot be challenged and a set of ‘ancillary beliefs’ or ‘protective belt assumptions’ that are more malleable and subject to change. Based on this insight, the alter-native framework proposes three dimensions of change that mutually interact and together determine the degree of possible policy change: I) cognitive, II) normative-institutional, and III) socio-political change. Corresponding with Lakatos’ hard core beliefs, it is the normative-institutionalist ideas that central bankers hold that will eventually determine which new ideas and policies will be considered, deemed acceptable and put into practice.   

Based on this analytical framework the dissertation reaches the conclusion that the continued attachment by AME central bankers to certain core principles of the old paradigm (i.e. price stability, strict central bank independence, monetary dominance and the long-term neutrality of money) has prevented a full-blown paradigm shift taking place both in the aftermath of the GFC and Covid19-crisis. Because the normative-institutionalist ideas of the current monetary policy consensus were not questioned more fundamentally, practical alternatives legitimizing radically different policy solutions were never allowed to blossom.}},
  author       = {{Van Doorslaer, Hielke}},
  keywords     = {{Monetary Policy,Central Banks,Macroeconomics,NAIRU,Green Monetary policy}},
  language     = {{eng}},
  pages        = {{238}},
  publisher    = {{Ghent University. Faculty of Political and Social Sciences}},
  school       = {{Ghent University}},
  title        = {{Same as it never was? Monetary politics in an era of lowflation and pending climate crisis}},
  year         = {{2022}},
}