The Library
The macrofinancial turn in central banking : money market changes and Federal Reserve policy after the global financial crisis
Tools
Pape, Fabian (2022) The macrofinancial turn in central banking : money market changes and Federal Reserve policy after the global financial crisis. PhD thesis, University of Warwick.
|
PDF
WRAP_THESIS_Pape_2022.pdf - Submitted Version - Requires a PDF viewer. Download (5Mb) | Preview |
Official URL: http://webcat.warwick.ac.uk/record=b3884060
Abstract
Following the global financial crisis, the Federal Reserve has taken on broader responsibilities in macroeconomic management and financial stability policy. While the existing literature has tended to analyse these new functions separately, I bring them together at the level of money market strategy. To that end, the thesis analyses the impact of the Fed’s expanded money market footprint between 2008 and 2020. I show how questions of liquidity governance impart important shortcomings on the central bank’s overall money market strategy. As monetary policy, fiscal policy, and financial stability imperatives become increasingly entangled in the organisation of market liquidity, they impose conflicting demands on central bank policy that cannot be easily reconciled within existing policy frameworks. As the result of this impasse, the Federal Reserve has generally pursued a hands-off approach to complex policy issues, notably by relying on its market-accommodating rather than market-shaping capacities, or what is now increasingly called a de-risking strategy. In raising questions about potential contradictions built into the Fed’s macrofinancial policy framework, the thesis highlights the politics that inhere in the organisation of highly technical market interventions.
To explain the transformation of Fed policy, I draw on two conceptual developments. First, I employ a critical macrofinance lens to view the quintessential task of central banking not simply as reacting to changes in inflation with interest rate measures, but more broadly as ensuring a certain level of liquidity within the system. Analytically, this shifts the focus of attention away from the central bank’s role in affecting macroeconomic aggregates—such as inflation, employment, or growth—and towards a macrofinancial understanding of the interactions between central banks and private finance. Second, and drawing on this approach, I link transformations in market microstructure to macro-level transformations in central banking by analysing how central bankers problematise the role and governance of liquidity within financial markets. I show that while liquidity continues to be understood primarily as a technical question of ensuring stability within the financial system, the governance of liquidity entails highly political questions of market organisation that shape how policymakers navigate and negotiate the contradictions between various policy interests.
Item Type: | Thesis (PhD) | ||||
---|---|---|---|---|---|
Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HG Finance H Social Sciences > HJ Public Finance |
||||
Library of Congress Subject Headings (LCSH): | Macroeconomics, Banks and banking, Central, Money market, Federal Reserve banks, Fiscal policy, Global Financial Crisis, 2008-2009 -- Influence | ||||
Official Date: | September 2022 | ||||
Dates: |
|
||||
Institution: | University of Warwick | ||||
Theses Department: | Department of Politics and International Studies | ||||
Thesis Type: | PhD | ||||
Publication Status: | Unpublished | ||||
Supervisor(s)/Advisor: | Watson, Matthew, 1969- ; Clarke, Chris D. | ||||
Sponsors: | University of Warwick. Department of Politics and International Studies ; Economic and Social Research Council (Great Britain) | ||||
Format of File: | |||||
Extent: | xi, 263 pages : charts | ||||
Language: | eng |
Request changes or add full text files to a record
Repository staff actions (login required)
View Item |