Central banking in hard times

Project funded by DFG


Duration January 2024 - December 2026
Principal investigators Benjamin Braun and Matthias Thiemann (Sciences Po Paris)
Postdoctoral researchers Monica Di Leo (Hertie School) and Jérôme Deyris (Sciences Po Paris)
Funders Deutsche Forschungsgemeinschaft (DFG) & Agence Nationale de la Recherche (ANR)
DFG funding amount €371,000
German host institution Hertie School, 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.