IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/hal-05083645.html
   My bibliography  Save this paper

Economists, Economic Knowledge, and Central Banks

Author

Listed:
  • Aurélien Goutsmedt

    (ISPOLE - UCL - Université Catholique de Louvain = Catholic University of Louvain, F.R.S.-FNRS, ICHEC - Brussels Management School [Bruxelles])

  • Francesco Sergi

    (LIPHA - Laboratoire Interdisciplinaire d'étude du Politique Hannah Arendt Paris-Est - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel)

  • Juan Acosta

    (Univalle - Universidad del Valle [Cali])

Abstract

What do economists do in central banks? Why do central banks hire economists? This book investigates the evolving role of economists and economic knowledge within central banks, arguing that their current centrality is neither self-evident nor historically inevitable. While the presence and influence of economists in central banks today may seem natural, this book shows that it is the result of a complex, gradual, and uneven historical process shaped by institutional structures, disciplinary transformations, and shifting relationships between science and policy. Drawing on a rich but dispersed body of literature, the book traces how economists progressively gained authority through the establishment of statistics departments, the adoption of macroeconometric models, and the emergence of a shared cognitive infrastructure between academia and central banks. Rather than focusing on individuals or doctrines, it examines general trends and institutional shifts across a series of national case studies to show how central banks function as boundary organizations, at the intersection of policy and science.'bullionist controversy' of the early nineteenth century about the convertibility of paper money. See e.g., Kynaston (2017, 89-98), Laidler (1989), Arnon (2011).14 On different 'traditions' in monetary thinking, see e.g. O'Brien (2007), Mehrling (2010), Laidler (2010), and Dimand (2010).15 This influence is particularly relevant with respect to three major topics: the issue of convertibility (guaranteeing the convertibility of Bank of England's notes into gold at a fix rate) and its effect on prices; the actions needed to manage gold inflows and outflows; and the role of the Bank as the 'lender of last resort', which refers to offering loans to commercial banks

Suggested Citation

  • Aurélien Goutsmedt & Francesco Sergi & Juan Acosta, 2025. "Economists, Economic Knowledge, and Central Banks," Working Papers hal-05083645, HAL.
  • Handle: RePEc:hal:wpaper:hal-05083645
    Note: View the original document on HAL open archive server: https://hal.science/hal-05083645v1
    as

    Download full text from publisher

    File URL: https://hal.science/hal-05083645v1/document
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kenneth Rogoff, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 100(4), pages 1169-1189.
    2. Jacqueline Best, 2019. "The Inflation Game: Targets, Practices and the Social Production of Monetary Credibility," New Political Economy, Taylor & Francis Journals, vol. 24(5), pages 623-640, September.
    3. repec:ucp:bkecon:9780226519999 is not listed on IDEAS
    4. Goutsmedt, Aurélien & Sergi, Francesco & Cherrier, Beatrice & Claveau, François & Fontan, Clément & Acosta, Juan, 2023. "To change or not to change The evolution of forecasting models at the Bank of England," SocArXiv m2cet, Center for Open Science.
    5. De Vroey Michel & Duarte Pedro Garcia, 2013. "In search of lost time: the neoclassical synthesis," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 965-995, January.
    6. Barro, Robert J & Gordon, David B, 1983. "A Positive Theory of Monetary Policy in a Natural Rate Model," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 589-610, August.
    7. Cherrier, Beatrice & Duarte, Pedro Garcia & Saïdi, Aurélien, 2023. "Household heterogeneity in macroeconomic models: A historical perspective," European Economic Review, Elsevier, vol. 158(C).
    8. Rebeca Gomez Betancourt & Ivo Maes, 2021. "Paul van Zeeland, a monetary economist between two worlds," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 28(1), pages 31-45, January.
    9. Nicolas Brisset, 2018. "Models as speech acts: the telling case of financial models," Journal of Economic Methodology, Taylor & Francis Journals, vol. 25(1), pages 21-41, January.
    10. Jeff Fuhrer & George Moore, 1995. "Inflation Persistence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(1), pages 127-159.
    11. Francesco Sergi, 2020. "The Standard Narrative about DSGE Models in Central Banks’ Technical Reports," Post-Print hal-03228951, HAL.
    12. Susana Matos Rosa, 2025. "Green Monetary Policy Measures and Central Bank Mandates: A Comparative Political Economy Analysis," Politics and Governance, Cogitatio Press, vol. 13.
    13. Aurélien Goutsmedt & Matthieu Renault & Francesco Sergi, 2021. "European Economics and the Early Years of the International Seminar on Macroeconomics," Revue d'économie politique, Dalloz, vol. 131(4), pages 693-722.
    14. Marvin Goodfriend & Robert G. King, 1997. "The New Neoclassical Synthesis and the Role of Monetary Policy," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 231-296, National Bureau of Economic Research, Inc.
    15. Peter Conti-Brown, 2016. "The Power and Independence of the Federal Reserve," Economics Books, Princeton University Press, edition 1, number 10576.
    16. repec:ces:ifodic:v:16:y:2018:i:3:p:50000000003755 is not listed on IDEAS
    17. Acosta, Juan & Cherrier, Beatrice, 2021. "The Transformation Of Economic Analysis At The Board Of Governors Of The Federal Reserve System During The 1960s," Journal of the History of Economic Thought, Cambridge University Press, vol. 43(3), pages 323-349, September.
    18. Christopher J. Erceg & Luca Guerrieri & Christopher Gust, 2006. "SIGMA: A New Open Economy Model for Policy Analysis," International Journal of Central Banking, International Journal of Central Banking, vol. 2(1), March.
    19. Fuhrer, Jeffrey C., 2010. "Inflation Persistence," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 9, pages 423-486, Elsevier.
    20. Robert L. Axtell & J. Doyne Farmer, 2025. "Agent-Based Modeling in Economics and Finance: Past, Present, and Future," Journal of Economic Literature, American Economic Association, vol. 63(1), pages 197-287, March.
    21. Goutsmedt, Aurélien & Sergi, Francesco, 2024. "Redefining Scientisation: Central Banks between Science and Politics," SocArXiv dxvfp, Center for Open Science.
    22. Takatoshi Ito, 1989. "Is the Bank of Japan a Closet Monetarist? Monetary Targeting in Japan, 1978-1988," NBER Working Papers 2879, National Bureau of Economic Research, Inc.
    23. Tobias Arbogast & Hielke Van Doorslaer & Mattias Vermeiren, 2024. "Another strange non-death: the NAIRU and the ideational foundations of the Federal Reserve’s new monetary policy framework," Review of International Political Economy, Taylor & Francis Journals, vol. 31(3), pages 805-830, May.
    24. Oddný Helgadóttir & Cornel Ban, 2021. "Managing Macroeconomic Neoliberalism: Capital and the Resilience of the Rational Expectations Assumption since the Great Recession," New Political Economy, Taylor & Francis Journals, vol. 26(5), pages 869-884, September.
    25. Greg Kaplan & Benjamin Moll & Giovanni L. Violante, 2018. "Monetary Policy According to HANK," American Economic Review, American Economic Association, vol. 108(3), pages 697-743, March.
    26. Hohberger, Stefan & Priftis, Romanos & Vogel, Lukas, 2019. "The macroeconomic effects of quantitative easing in the euro area: Evidence from an estimated DSGE model," Journal of Economic Dynamics and Control, Elsevier, vol. 108(C).
    27. Ivo Maes, 2010. "A century of macroeconomic and monetary thought at the National Bank of Belgium," Working Paper Research 188, National Bank of Belgium.
    28. Ricardo J. Caballero, 2010. "Macroeconomics after the Crisis: Time to Deal with the Pretense-of-Knowledge Syndrome," Journal of Economic Perspectives, American Economic Association, vol. 24(4), pages 85-102, Fall.
    29. Aurelien Goutsmedt & Erich Pinzon-Fuchs & Matthieu Renault & Francesco Sergi, 2019. "Reacting to the Lucas Critique: The Keynesians' Replies," History of Political Economy, Duke University Press, vol. 51(3), pages 535-556, June.
    30. Paul Grauwe, 2011. "Animal spirits and monetary policy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 47(2), pages 423-457, June.
    31. Hunt, Benjamin & Rose, David & Scott, Alasdair, 2000. "The core model of the Reserve Bank of New Zealand's Forecasting and Policy System," Economic Modelling, Elsevier, vol. 17(2), pages 247-274, April.
    32. Aurélien Goutsmedt & Matthieu Renault & Francesco Sergi, 2020. "European Economics and the Early Years of the "International Seminar on Macroeconomics"," GREDEG Working Papers 2020-26, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    33. Jérôme Deyris, 2023. "Too green to be true? Forging a climate consensus at the European Central Bank," New Political Economy, Taylor & Francis Journals, vol. 28(5), pages 713-730, September.
    34. Alesina, Alberto & Summers, Lawrence H, 1993. "Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(2), pages 151-162, May.
    35. Lawrence J. Christiano & Martin Eichenbaum & Charles L. Evans, 2005. "Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 1-45, February.
    36. Matteo Iacoviello & Stefano Neri, 2010. "Housing Market Spillovers: Evidence from an Estimated DSGE Model," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 125-164, April.
    37. Julian Reiss, 2012. "The explanation paradox," Journal of Economic Methodology, Taylor & Francis Journals, vol. 19(1), pages 43-62, March.
    38. Sandrine Leloup & Hans-Michael Trautwein, 2024. "Walter Bagehot and Lombard Street (1873): introduction to a 150-year retrospective," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 31(5), pages 701-707, September.
    39. Laxton, Douglas & Pesenti, Paolo, 2003. "Monetary rules for small, open, emerging economies," Journal of Monetary Economics, Elsevier, vol. 50(5), pages 1109-1146, July.
    40. Bollard, Alan, 2016. "A Few Hares to Chase: The Economic Life and Times of Bill Phillips," OUP Catalogue, Oxford University Press, number 9780198747543, Decembrie.
    41. Thomas Delcey & Francesco Sergi, 2023. "The efficient market hypothesis and rational expectations macroeconomics. How did they meet and live (happily) ever after?," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 30(1), pages 86-116, January.
    42. William P. Yohe, 1990. "The intellectual milieu at the Federal Reserve Board in the 1920s," History of Political Economy, Duke University Press, vol. 22(3), pages 465-488, Fall.
    43. Kevin Hoover, 1994. "Econometrics as observation: the Lucas critique and the nature of econometric inference," Journal of Economic Methodology, Taylor & Francis Journals, vol. 1(1), pages 65-80.
    44. Rebeca Gomez Betancourt, 2022. "The Political Economy of a Modern Missionary: E. W. Kemmerer in the Philippines," Post-Print halshs-03641665, HAL.
    45. Saroj Bhattarai & Christopher J. Neely, 2022. "An Analysis of the Literature on International Unconventional Monetary Policy," Journal of Economic Literature, American Economic Association, vol. 60(2), pages 527-597, June.
    46. Sandrine Leloup & Hans-Michael Trautwein, 2024. "Walter Bagehot and Lombard Street (1873): Introduction to a 150-year retrospective," Post-Print hal-04776207, HAL.
    47. Janet L. Yellen, 2009. "A Minsky meltdown: lessons for central bankers," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue may1.
    48. Duguay, Pierre & Longworth, David, 1998. "Macroeconomic models and policy making at the bank of canada," Economic Modelling, Elsevier, vol. 15(3), pages 357-375, July.
    49. Forder, James, 2014. "Macroeconomics and the Phillips Curve Myth," OUP Catalogue, Oxford University Press, number 9780199683659, Decembrie.
    50. Francesco Sergi, 2020. "The Standard Narrative about DSGE Models in Central Banks’ Technical Reports," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 27(2), pages 163-193, March.
    51. Roger Backhouse & Béatrice Cherrier, 2019. "The Ordinary Business of Macroeconometric Modeling: Working on the Fed-MIT-Penn Model, 1964–74," Post-Print halshs-02725159, HAL.
    52. Hetzel,Robert L., 2008. "The Monetary Policy of the Federal Reserve," Cambridge Books, Cambridge University Press, number 9780521881326, September.
    53. John F. Helliwell, 2006. "From Flapper to Bluestocking: What Happened to the Young Woman of Wellington Street?," Bank of Canada Review, Bank of Canada, vol. 2005(Winter), pages 31-39.
    54. Jeffrey M. Chwieroth, 2010. "Capital Ideas: The IMF and the Rise of Financial Liberalization," Economics Books, Princeton University Press, edition 1, number 9087.
    55. Ben S. Bernanke & Frederic S. Mishkin, 1997. "Inflation Targeting: A New Framework for Monetary Policy?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 97-116, Spring.
    56. Stine Quorning, 2024. "The ‘climate shift’ in central banks: how field arbitrageurs paved the way for climate stress testing," Review of International Political Economy, Taylor & Francis Journals, vol. 31(1), pages 74-96, January.
    57. Frédéric Boissay & Fabrice Collard & Frank Smets, 2016. "Booms and Banking Crises," Journal of Political Economy, University of Chicago Press, vol. 124(2), pages 489-538.
    58. repec:osf:osfxxx:qxh46_v1 is not listed on IDEAS
    59. Jérôme Deyris, 2023. "Too green to be true? Forging a climate consensus at the European Central Bank," Post-Print hal-04638404, HAL.
    60. François Claveau & Jérémie Dion, 2018. "Quantifying central banks’ scientization: why and how to do a quantified organizational history of economics," Journal of Economic Methodology, Taylor & Francis Journals, vol. 25(4), pages 349-366, October.
    61. Hsiang-Ke Chao, 2019. "Inference to the Best Model of the Consumption Function," History of Political Economy, Duke University Press, vol. 51(3), pages 493-513, June.
    62. Perry Mehrling, 2010. "The New Lombard Street: How the Fed Became the Dealer of Last Resort," Economics Books, Princeton University Press, edition 1, number 9298.
    63. Roger E. Backhouse & Beatrice Cherrier, 2019. "The Ordinary Business of Macroeconometric Modeling: Working on the Fed-MIT-Penn Model, 1964–74," History of Political Economy, Duke University Press, vol. 51(3), pages 425-447, June.
    64. Antonella Rancan, 2019. "Empirical Macroeconomics in a Policy Context: The Fed-MIT-Penn Model versus the St. Louis Model, 1965–75," History of Political Economy, Duke University Press, vol. 51(3), pages 449-470, June.
    65. Nicholas G. Zonzilos, 2004. "Econometric Modelling at the Bank of Greece," Working Papers 14, Bank of Greece.
    66. Franco Modigliani & Lucas Papademos, 1975. "Targets for Monetary Policy in the Coming Year," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 6(1), pages 141-166.
    67. repec:hal:journl:hal-04431044 is not listed on IDEAS
    68. Bjerkholt, Olav, 1998. "Interaction between model builders and policy makers in the Norwegian tradition," Economic Modelling, Elsevier, vol. 15(3), pages 317-339, July.
    69. Gardner, Leigh A., 2012. "Taxing Colonial Africa: The Political Economy of British Imperialism," OUP Catalogue, Oxford University Press, number 9780199661527, Decembrie.
    70. Frank Smets & Raf Wouters, 2003. "An Estimated Dynamic Stochastic General Equilibrium Model of the Euro Area," Journal of the European Economic Association, MIT Press, vol. 1(5), pages 1123-1175, September.
    71. Matthieu Renault, 2022. "Theory to the Rescue of Large-Scale Models: Edmond Malinvaud's View on the Search for Microfoundations," Post-Print hal-03051850, HAL.
    72. James, Harold, 2012. "Making the European Monetary Union," Economics Books, Harvard University Press, number 9780674066830, Spring.
    73. Luca Einaudi, 2018. "A Historical Perspective on the Euro: the Latin Monetary Union (1865–1926)," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 16(03), pages 17-20, November.
    74. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jordi Galí & Mark Gertler, 2007. "Macroeconomic Modeling for Monetary Policy Evaluation," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 25-46, Fall.
    2. Gregory E. Givens, 2012. "Estimating Central Bank Preferences under Commitment and Discretion," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44(6), pages 1033-1061, September.
    3. Mark Gertler & Jordi Gali & Richard Clarida, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1661-1707, December.
    4. Goutsmedt, Aurélien & Sergi, Francesco, 2024. "Redefining Scientisation: Central Banks between Science and Politics," SocArXiv dxvfp, Center for Open Science.
    5. Palma, Andreza Aparecida & Portugal, Marcelo Savino, 2011. "Preferences of the Central Bank of Brasil under the inflation targeting regime: commitment vs. discretion," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 65(4), November.
    6. Francesco Sergi, 2020. "The Standard Narrative about DSGE Models in Central Banks’ Technical Reports," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 27(2), pages 163-193, March.
    7. Dennis, Richard & Soderstrom, Ulf, 2006. "How Important Is Precommitment for Monetary Policy?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 38(4), pages 847-872, June.
    8. Schmidt, Sebastian & Wieland, Volker, 2013. "The New Keynesian Approach to Dynamic General Equilibrium Modeling: Models, Methods and Macroeconomic Policy Evaluation," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1439-1512, Elsevier.
    9. repec:fgv:epgrbe:v:65:n:4:a:2 is not listed on IDEAS
    10. Singleton,John, 2010. "Central Banking in the Twentieth Century," Cambridge Books, Cambridge University Press, number 9780521899093, September.
    11. Wieland, Volker & Binder, Michael & Lieberknecht, Philipp & Quintana, Jorge, 2017. "Model Uncertainty in Macroeconomics: On the Implications of Financial Frictions," CEPR Discussion Papers 12013, C.E.P.R. Discussion Papers.
    12. Muellbauer, John, 2018. "The Future of Macroeconomics," INET Oxford Working Papers 2018-10, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    13. Volker Wieland & Maik Wolters, 2011. "The diversity of forecasts from macroeconomic models of the US economy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 47(2), pages 247-292, June.
    14. Yvan Lengwiler & Athanasios Orphanides, 2002. "Optimal Discretion," Scandinavian Journal of Economics, Wiley Blackwell, vol. 104(2), pages 261-276, June.
    15. Henrik Jensen, 2002. "Targeting Nominal Income Growth or Inflation?," American Economic Review, American Economic Association, vol. 92(4), pages 928-956, September.
    16. Jean-Paul Lam, 2003. "Alternative Targeting Regimes, Transmission lags and the Exchange rate Channel," Macroeconomics 0309005, University Library of Munich, Germany, revised 03 Dec 2003.
    17. Goutsmedt, Aurélien & Truc, Alexandre, 2023. "An independent European macroeconomics? A history of European macroeconomics through the lens of the European Economic Review," European Economic Review, Elsevier, vol. 158(C).
    18. Fujiwara, Ippei & Hara, Naoko & Hirose, Yasuo & Teranishi, Yuki, 2005. "The Japanese Economic Model (JEM)," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 23(2), pages 61-142, May.
    19. Thorvardur Tjörvi Ólafsson, 2006. "The New Keynesian Phillips Curve: In Search of Improvements and Adaptation to the Open Economy," Economics wp31_tjorvi, Department of Economics, Central bank of Iceland.
    20. Francesco Sergi, 2015. "L'histoire (faussement) naïve des modèles DSGE," Documents de travail du Centre d'Economie de la Sorbonne 15066, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    21. Jean-Paul Lam & Florian Pelgrin, 2004. "The Implications of Transmission and Information Lags for the Stabilization Bias and Optimal Delegation," Staff Working Papers 04-37, Bank of Canada.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:hal-05083645. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.