Bridging the gaping hole: central bank economists’ role in the rise of macro-finance post-crisis

Abstract

How has mainstream academic economic discourse evolved to regain its epistemic authority after the financial crisis of 2008 revealed serious blind spots in economic modelling that shattered the profession’s claim to be able to predict and control macroeconomic variables? To answer this question, we combine content with bibliometric analyses of nearly 70,000 papers on macroeconomics and finance published in academic journals from 1990 to 2019. These analyses reveal how a structural rapprochement between macroeconomics and finance created the new subfield of macro-finance. We show that contributions by central bank economists, driven by central banks’ newly acquired macroprudential mandate, were key to its establishment. Acting within the space of regulatory science, they connected macroeconomic and financial knowledge to satisfy their employers’ administrative needs, while also helping to bridge the gaping hole in economic discourse, thereby taking on an important stabilizing role for the epistemic authority of economics.