Since the global financial crisis of 2008, major central banks have implemented extensive crisis measures and policy innovations that have challenged prevailing paradigms and formal mandates.
"Crisis measures have crossed borders, and liquidity support has been given to new classes of financial institutions and assets," says Ingrid Hjertaker.
These policy innovations have also blurred the boundaries between fiscal policy and monetary policy.
"My dissertation examines the crisis measures and policy innovations done at the European Central Bank and the US Federal Reserve in the period 2007-2021, and finds that both the content and timing of these crisis measures were shaped by contestation around, and considerations of, the political, legal and administrative context for central banking," says Hjertaker.
The dissertation further proposes a new, four-dimensional approach to central bank powers – (infra)structural power, emergency power, bureaucratic power and ideational power.
"In approaching the concept of central bank power in this way, we are better able to see that these crisis measures may have increased central bank emergency power, but at the same time reduced the ideational power of these institutions as their actions are no longer strictly rule-based and in compliance with a limited policy regime," according to Ingrid Hjertaker.
Hjertaker's thesis is titled "Rebels without a cause? Change, contestation and power in a central banking interregnum".
The main findings of the doctoral thesis:
- Central banks have had to innovate on policy in the face of large crisis. This policymaking has been characterized not just by a search for technical solutions but by conflict and learning around the political, legal and administrative context of central banking.
- The contestations around appropriate policy affected both the timing and content of policy
- Through these crisis measures, central banks have become more powerful institutions along some dimensions, such as their emergency and organizational power and capacity, yet have also seen a decrease in their ideational power, as policies have been more discretionary and less compliant with a paradigm and the policies have been controversial both internally and externally.