Toward a progressive central banker

Louis-Philippe Rochon and Guillaume Vallet

Chapter 12 in Are Central Banks Still Conservative?, 2025, pp 268-287 from Edward Elgar Publishing

Abstract: Forty years ago, Kenneth Rogoff proposed his famous model of the “conservative central banker.” To many mainstream economists, this model laid the foundations of contemporary central banking, along with central bank independence and inflation targeting. This chapter seeks to critically appraise this model, casting doubt on some of its theoretical foundations and on its relevance. To that end, we wish first to question the demand-pull nature of inflation, the monetary policy transmission mechanism, and central bank independence underpinning the model. Second, we propose as an alternative to Rogoff's model that of the “progressive central banker.” This revised model would consider the heterogeneous preferences among people, leading to social conflicts and relations of power, and the possible capture of monetary policy by the financial sector. Therefore, in the age of major challenges affecting today's capitalism, the model of the “progressive central banker” points out the need to redesign monetary policy resting on three keystones: (1) to acknowledge that central banks are institutions exerting a “structural power”; (2) to take into account new monetary policy transmission channels and, more broadly, new challenges for central banks; and (3) to consider that central banks should be deemed embedded institutions.

Keywords: Conservative central banker; Central banks’; Independence; Progressive central banker; Institutions; Institutionalism; Structural Power (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035337569
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