In key areas of economic governance, best practice demands the depoliticization of policy-making via the delegation of power to technocrats. Dominated by principal-agent theory, the literature on delegation has focused on meddling governments as the primary cause of repoliticization. This model does not, however, fit the repoliticization of central banking since the 2008 financial crisis. Instead of governments seeking to reduce or revoke central bank independence, public contestation drove the politicization of monetary policy. Benjamin Braun and Maximilian Düsterhöft propose an endogenous theory of technocratic repoliticization: In response to governability problems, technocrats overstep their mandates; in order to manage the resulting legitimacy gap, technocrats must become technocrat-politicians. The authors test this theory by studying the response of central banks to public contestation over quantitative easing, or QE. Politicization is operationalized as strategic silence on particularly contested QE-related topics and measured using an original data set of public speeches by 18 central banks from 2000 through 2019. Using panel data regression and event study analysis, they obtain the robust result that QE central banks exhibit strategic silence on house prices, exchange rates, and global warming. The finding that politics continues in spite of delegation calls into question the democratic exception of technocratic power.

CO-AUTHORS

Benjamin Braun is a senior researcher at the Max Planck Institute for the Study of Societies in Cologne. His current research projects focus on the politics of central banking and on the political economy of asset manager capitalism. His work has been published, among others, in Socio-Economic Review, Review of International Political Economy, and Economy and Society.

Maximilian Düsterhöft is a researcher at Technische Universität Dresden. He recently submitted his PhD dissertation on the economics and politics of central bank communication.