Adding rooms onto a house we love: Central banking after the global financial crisis

DOIhttp://doi.org/10.1111/padm.12567
AuthorVladislav Portniaguine,Vincent Arel‐Bundock,Juliet Johnson
Published date01 September 2019
Date01 September 2019
SYMPOSIUM ARTICLE
Adding rooms onto a house we love: Central
banking after the global financial crisis
Juliet Johnson | Vincent Arel-Bundock | Vladislav Portniaguine
Department of Political Science, McGill
University Faculty of Arts, Quebec, Canada
Correspondence
Juliet Johnson, Department of Political
Science, McGill University Faculty of Arts,
Leacock 414, 855 Sherbrooke St West,
Montreal, Quebec, Canada H3A 2T7.
Email: juliet.johnson@mcgill.ca
Funding information
Social Sciences and Humanities Research
Council of Canada, Grant/Award Number:
430-2015-00684
This article examines the extent to which central bankers have
been willing and able to rethink their beliefs about monetary policy
in the wake of the global financial crisis. We show that despite the
upheaval, the core pre-crisis monetary policy paradigm remains rel-
atively intact: central bankers believe that they should primarily
pursue price stability through targeting a low inflation rate in a
transparent manner, and that they need operational independence
in order to achieve this goal. In a bid to address post-crisis condi-
tions and maintain their credibility, however, central bankers have
also layered new elements onto this paradigmatic core. We docu-
ment both the resilience of pre-crisis beliefs and the process of
layering using computer-assisted text analysis and qualitative
analysis of 13,586 speeches given between 1997 and 2017 by cen-
tral bankers from around the world.
It still feels to me like we are adding various rooms onto a house we love, rather than creating a new,
elegant, and coherent structure. (Stephen Poloz, Bank of Canada, 2015, r150226a)
1|INTRODUCTION
Central bankers, scholars, and politicians alike have observed the multiple ways in which the global financial crisis of
200708 has reshaped the theory and practice of central banking. In the wake of the crisis, central bankers faced
fundamental challenges to their previously dominant, widely shared beliefs and practices. A shock of this magnitude
naturally spurs a desire to understand why it happened and to prevent recurrence (Bennett and Howlett 1992). At
the same time, as Rose (1991, p. 3) puts it, searching for fresh knowledge is not normal. The costs of information
acquisition, the uncertainty associated with policy change, the embeddedness of routine practices, and the appeal of
the status quo can all hinder change in public agencies. This article examines central bank learning in monetary policy,
investigating the extent to which central bankers have been willing and able to rethink their pre-crisis monetary pol-
icy paradigm.
Received: 20 February 2018 Revised: 14 October 2018 Accepted: 16 October 2018
DOI: 10.1111/padm.12567
546 © 2018 John Wiley & Sons Ltd wileyonlinelibrary.com/journal/padm Public Administration. 2019;97:546560.

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