Central banking in hard times

Knowledge, legitimacy, and politics


  • Duration: October 2023 - September 2026

  • Principal investigators: Benjamin Braun and Matthias Thiemann (Sciences Po Paris)

  • Funders: Deutsche Forschungsgemeinschaft (DFG) & Agence Nationale de la Recherche (ANR)

  • DFG funding amount: €371,000

  • German host institution: Hertie School of Governance, Berlin


Central banking is experiencing a severe crisis of both policy knowledge and political legitimacy. Since the global financial crisis of 2008, central banks – and the broader macrofinancial order they sustain – have become increasingly contested, both among experts and the broader public. How do central banks navigate this newly politicized landscape? How do monetary theory and practice evolve under various types of political pressure? To answer these questions, KnowLegPo develops a theoretical framework organized around four ‘publics’ and two mechanisms: Central banks simultaneously interact with financial market actors, their own governments, the broader public, and an expert community of academic and central bank economists. In those interactions, central bank knowledge is constantly being challenged by epistemic contestation and/or political contestation. To study these mechanisms, we use a mixed method approach, combining natural language processing and qualitative methods, including interviews with policymakers. KnowLegPo will focus on monetary policy and financial stability policy, as well as on climate policy – an erstwhile taboo topic that many central banks have recently had to engage with. How central banks position themselves shapes the outcomes of policy battles in these areas, which in turn will shape the broader macrofinancial order, and thus state capacity and industrial policy.


Our scientific objectives are to overcome three limitations of earlier work in the field. First, research on central banks has been theoretically limited in that it focused either on ideas and knowledge or on politics and legitimacy. KnowLegPomoves beyond this separation by conceptualizing the two spheres as mutually interdependent and co-evolving. Second, while central banks’ interactions with their different publics have been studied by economists (financial markets), sociologists (academic economists), political scientists (political principals), and anthropologists (general public), these literatures have largely remained siloed. We overcome this empirical limitation by integrating these public interactions into a single analytical framework. Third, past research designs have been methodologically limited in that they tended to be either qualitative or quantitative. KnowLegPowill pursue a mixed-methods approach that combines natural language processing to analyse large volumes of textual data with detailed case studies based on document analysis and interviews with policymakers.

Our hypothesis is that central bankers prefer to operate in an environment defined by epistemic consensus and quiet politics, and will adjust their discourse and policy stance in order to reduce epistemic dissensus and/or escape noisy politics. Epistemic consensus and quiet politics are easily destabilized, however: established policy paradigms tend to become less effective over time (‘Goodhart’s law’); new theoretical paradigms may lag behind practical, crisis-induced policy innovations; and public expectations shift under changing economic and political conditions. KnowLegPo will investigate how central banks adjust their discourse and policy stance under conditions of epistemic and/or political contestation.

The scope conditions of our theoretical framework are broad but not universal. The framework applies to central banks whose independence affords them a certain room for manoeuvre vis-à-vis their various publics, including government principals. The quantitative components of the project will focus on a larger group of about 15 central banks in advanced and emerging economies. The qualitative component of the project will focus on five nominally independent central banks which show important variation regarding our key explanatory variables of epistemic consensus and politicization – the highly scientized and, initially, highly depoliticized ECB (Mudge and Vauchez 2016); the US Fed with its dual mandate and stronger Congressional accountability, which invites contestation Jacobs and King (2016); the politically exposed Bank of England (Wansleben 2022); the Bank of Japan, which since 2013 has de facto not been independent (Park, Cheung, and Katada 2022); and the South African Reserve Bank which, as an emerging economy central bank, is subject to different epistemic and political constraints (Zayim 2020).

The scientific output from KnowLegPo will consist of a series of articles in social science journals. In addition, we will publish a working paper that introduces and explains our newly assembled database. Our broader societal objective is to contribute to the search for new channels for technocratic accountability. Our research and dataset will provide an infrastructure for other researchers and for civil society to monitor the activities of central banks and holding them accountable, and thus to provide the feedback and input needed for high-quality economic policymaking.


Conti-Brown, Peter. 2016. The Power and Independence of the Federal Reserve. Princeton: Princeton University Press.
Jacobs, Lawrence, and Desmond King. 2016. Fed Power: How Finance Wins. Oxford: Oxford University Press.
Mudge, Stephanie L., and Antoine Vauchez. 2016. “Fielding Supranationalism: The European Central Bank as a Field Effect.” The Sociological Review Monographs 64 (2): 146–69. https://doi.org/10.1002/2059-7932.12006.
Park, Gene, Gabrielle Cheung, and Saori N. Katada. 2022. “Asymmetric Incentives and the New Politics of Monetary Policy.” Socio-Economic Review 20 (2): 733–57. https://doi.org/10.1093/ser/mwaa045.
Wansleben, Leon. 2022. The Rise of Central Banks: State Power in Financial Capitalism. Cambrdige, MA: Harvard University Press.
Zayim, Ayca. 2020. “Inside the Black Box: Credibility and the Situational Power of Central Banks.” Socio-Economic Review.