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Developmental central banking: winning the future by updating a page from the past

Author

Listed:
  • Gerald Epstein

    (University of Massachusetts)

Abstract
The ongoing Great Financial Crisis that began in 2007–2008 has dramatically called into question the previously dominant neoliberal approach to macroeconomic and financial policy. Unfortunately, these lessons are being learned in a highly uneven manner – and in some important circles, not at all. In light of this struggle to adopt developmentally friendly financial structures, it is critical that the history and practices of these policies, as well as their costs and benefits, be well understood. There is much rich history of developmental finance and central banking to draw from and many lessons to be found there. In this paper, we survey some of this history, focusing on the late twentieth century, including a discussion of policies undertaken following the Great Financial Crisis. The major lesson we draw is that developmental roles of central banks and related financial institutions have been the dominant approach in many periods since the mid twentieth century at least, and that the neoliberal approach to these policies is much more the exception than the rule. The way forward out of this crisis is to recognize the current policies for what they are – experiments in more developmental policy – and to build on them for the longer run, rather than see them as exceptional aberrations that should be abandoned at the first opportunity.

Suggested Citation

  • Gerald Epstein, 2013. "Developmental central banking: winning the future by updating a page from the past," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(3), pages 273-287, January.
    • Handle: RePEc:elg:rokejn:v:1:y:2013:i:3:p273-287
    as

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    References listed on IDEAS

    as
    1. Brimmer, Andrew F, 1971. "Central Banking and Economic Development: The Record of Innovation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 3(4), pages 780-792, November.
    2. Cynamon,Barry Z. & Fazzari,Steven & Setterfield,Mark (ed.), 2013. "After the Great Recession," Cambridge Books, Cambridge University Press, number 9781107015890, September.
    3. Thomas I. Palley, 2013. "Monetary Policy and Central Banking after the Crisis: The Implications of Rethinking Macroeconomic Theory," Palgrave Macmillan Books, in: Financialization, chapter 11, pages 182-200, Palgrave Macmillan.
    4. Gerald A. Epstein & A. Erinc Yeldan (ed.), 2009. "Beyond Inflation Targeting," Books, Edward Elgar Publishing, number 13168.
    5. Arthur I. Bloomfield, 1957. "Some Problems Of Central Banking In Underdeveloped Countries," Journal of Finance, American Finance Association, vol. 12(2), pages 190-212, May.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Ulrich Volz, 2015. "On the Future of Inflation Targeting in East Asia," Review of Development Economics, Wiley Blackwell, vol. 19(3), pages 638-652, August.
    2. Victor Manuel Isidro Luna, 2019. "Development banking, state of confidence and sustainable growth," Working Papers PKWP1917, Post Keynesian Economics Society (PKES).
    3. Dafe, Florence, 2018. "Fuelled power: oil, financiers and central bank policy in Nigeria," LSE Research Online Documents on Economics 89610, London School of Economics and Political Science, LSE Library.
    4. Sheila Dow, 2014. "The Relationship Between Central Banks And Governments: What Are Central Banks For?," Department Discussion Papers 1401, Department of Economics, University of Victoria.

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    More about this item

    Keywords

    developmental central banking; inflation targeting; employment targeting; monetary policy;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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