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Essays in the political economy of central banking

Diessner, Sebastian (2019) Essays in the political economy of central banking. PhD thesis, London School of Economics and Political Science.

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This doctoral thesis engages the political economy of central banking and central bank independence (short: CBI) by challenging and qualifying prevalent pre-crisis and post-crisis accounts of CBI as well as existing explanations of the policy-making of major central banks. Central banks have emerged from the economic and financial crises of the late-2000s as one of the key actors in the macroeconomy of advanced political economies. Understanding their actions and motivations, as well as the evolving relationship and communication between central banks and their variegated stakeholders, has thus become a more relevant feat than hardly ever before. The thesis consists of a set of three essays, employing a mixed-methods strategy which combines quantitative text analysis (in the first essay) with élite interviews (in the second and third essays) as well as qualitative document analyses (in all three essays). The first of the three essays revisits the Eurozone's unparalleled monetary-fiscal 'divorce' in light of an equally unparalleled involvement of the ECB in fiscal policy issues throughout the crisis. It argues that a situation best characterized as 'financial dominance' can help explain this puzzling observation, drawing our attention to the ECB's concerns about bearing financial risks on its balance sheet and its desire for fiscal solutions to alleviate these concerns. The second and third essays, in turn, pick up on and dig deeper into this apparent risk aversion on behalf of central banks in the context of unconventional monetary policy, probing into the understudied and perplexing political economy of central bank capital and concerns for central bank solvency. While the thesis as a whole is focused on the case of the Eurozone, it also leverages pertinent comparisons with other advanced political economies, notably the United Kingdom and Japan.

Item Type: Thesis (PhD)
Additional Information: © 2019 Sebastian Diessner
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HG Finance
J Political Science > JA Political science (General)
Sets: Departments > European Institute
Supervisor: Schonhardt-Bailey, Cheryl and De Grauwe, Paul

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