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Abstract

This article revives the comparative political economy of central banking. Drawingon growth models theory, I argue that export-led and debt-led growth modelsimply fundamentally different versions of central banking and rely on different com-binations of monetary, financial, and exchange-rate policies. Historical institutional-ists plausibly argue that central banks have learned to pursue these policiesbecause dominant coalitions have shaped central banks’institutional roles. Butsince the 1970s, policy activism has become more important. To explain why theBundesbank and Federal Reserve have come to support the German and US growthmodels during Post-Fordism, I look at how sense-making processes informed policyinnovations. In the German case, the Buba carved out a powerful disciplining rolefor itself in corporatist coordination, which aligned with the demand-restraining fea-tures of Germany’s export-led model; corporate profit expectations signaled eco-nomic health. A dilemma arose with deteriorating price competitiveness that theBuba resolved by imposing an export version of secular stagnation. In the US case,Paul Volcker’s aggressive interest rate hikes to eliminate‘inflation scares’ushered inan area in which monetary policy became focused on bond market credibility.Greenspan consolidated central banking for financialization by hardening the Fed’sbail-out promise and its focus on‘wealth effects’.