Inside the black box

Credibility and the Situational Power of Central Banks

Bibliographic Data

ID5081256
AuthorsAyca Zayim (Mount Holyoke College, corresponding author)
Year2022
Volume20
Issue2
Pages759-789
Publication date2022-07-08
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueSocio-Economic Review (JOURNAL)
Journal identifiersISSN: 1475-1461 • E-ISSN: 1475-147X
PublisherOxford University Press (PUBLISHER • GB)
DOI10.1093/ser/mwaa011
OpenAlexW3011766860
LanguageEN
Citations received6
References cited66

Despite the consensus that the power of finance constraints central banks under financial globalization, the variation in their autonomy from market forces at the micro level of monetary policymaking remains underexplored. This article demonstrates that credibility endows central banks with situational power to make monetary policy decisions that involve less sacrifice of economic growth to price stability. Based on the comparative analysis of the policy decisions of central banks in two emerging economies, South Africa and Turkey, during 2013-2014, I show that this policy space stems from central banks' capacity to successfully influence market expectations. The argument relies on public texts and over 130 interviews with central bankers in South Africa and Turkey and financiers in Johannesburg, Istanbul and London. The findings contribute to literature on central bank credibility and communication by exploring how credibility functions and creates room for central banks to maneuver through influencing contingent and performative expectations

Argument (complex analysis) · Autonomy · Business · Central bank · Credibility · Economics · Emerging markets · Financial system · Globalization · Market economy · Monetary economics · Monetary policy · Performative utterance · Political science · Profitability index · Situational ethics · Banking stability, regulation, efficiency · Finance · Global Financial Crisis and Policies · Global Financial Regulation and Crises

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