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Masters of the ‘masters of the universe’? Monetary, fiscal and financial dominance in the Eurozone

Diessner, Sebastian and Lisi, Giulio (2019) Masters of the ‘masters of the universe’? Monetary, fiscal and financial dominance in the Eurozone. Socio-Economic Review. ISSN 1475-1461

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Identification Number: 10.1093/ser/mwz017

Abstract

The rise of central bankers to the status of new ‘masters of the universe’ has been matched by mounting allegations of political overreach. In the Eurozone, for instance, the ECB has increasingly been accused of straying into the fiscal realm. Why do politically independent central banks engage intensely and publicly with government policies, thereby threatening the neat separation between monetary and fiscal policy that was meant to protect central banks themselves from interference? While existing political economy accounts have focused squarely on the issues of government debt and central bankers' fears of fiscal dominance, we argue for the emerging role of ‘financial dominance’ throughout the crisis, thereby shedding light on the structural forces that master the new masters of the universe. To this end, we pursue a mixed-methods approach, combining quantitative text analysis techniques with a qualitative understanding of the context in which central banks communicate on fiscal policy.

Item Type: Article
Additional Information: © 2019 The Authors
Divisions: European Institute
Subjects: H Social Sciences > HG Finance
H Social Sciences > HC Economic History and Conditions
J Political Science > JN Political institutions (Europe)
JEL classification: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies
G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation
P - Economic Systems > P1 - Capitalist Systems > P16 - Political Economy
Date Deposited: 08 May 2019 08:33
Last Modified: 11 Sep 2019 23:09
URI: http://eprints.lse.ac.uk/id/eprint/100754

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