Growth models and central banking: dominant coalitions, organizational sense-making, and conservative policy innovations at the Bundesbank and Fed

Figures & data

Figure 1. Codings of expectation themes in Buba monthly reports, 1975–1999.

Source: Bundesbank.

Figure 2. Explicit policy expectations held by financial markets, as observed in Fed Greenbooks (references per year).

Source: Board of the Federal Reserve and Bundesbank.

Figure 3. Codings of expectation themes in Greenbooks, 1975–1999.

Source: Federal Reserve Board, Washington.

Table 1. Condensed case comparison.

Central bank (CB)	Institutional identity in formative period	CB’s predominant understanding of the 1970s inflationary problem	Major focus of attention after Great Inflation	Major sources of infra-structural power	Key dilemma
Buba	Monetary guardian and defender of under-valuation regime	Unstable international monetary order and late birth of Keynesianism unleash domestic inflationary forces	Stable money through wage and fiscal restraint; growth through competitiveness in tradable goods sector	Corporatist institutions and universal banking	Economic stagnation due to FX-induced loss of price competitiveness combined with continued demand restraint
Fed	Financial management folded into macro-economic policy	Unravelling of inflation expectations on financial markets	Stable inflation expectations through coordination with bond markets; demand through wealth effects	Market-based finance and financialized economy	Temporary stabilization through “Fed puts” and bail outs but more aggressive risk taking and over-leverage as a result