The IS–LMization of the General Theory and the Construction of Hydraulic Governability in Postwar Keynesian Macroeconomics

Pahl, Hanno; Sparsam, Jan

doi:10.1057/978-1-137-48876-3_7

Cited by 3 publications

(2 citation statements)

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“…As the section 'Long-term Interest Rates as Policy Variables: Post-crisis Central Bank Planning' will demonstrate for the case of the European Central Bank (ECB), this has made it harder to maintain the pretence of superior central bank knowledge. The attempt to bolster the credibility of its commitment to stabilize inflation at a low but positive rate has, this chapter will argue, undermined the ECB's claim to epistemic authority.Non-market Price Setting: From Hydraulic to Performative Governability, and Back AgainThe quasi-mechanical connection between government spending and aggregate demand-the economic agency of the Keynesian state-can be conceptualized as hydraulic(Braun 2014, 59;Pahl and Sparsam 2016). Central bank agency under inflation targeting, by contrast, has been described as communicative and performative: central bankers' utterances 'are making the economy … as a communicative field and as an empirical fact'…”

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confidence: 99%

Central bank planning: Unconventional monetary policy and the price of bending the yield curve

Braun

2017

Preprint

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Central banks have increasingly used communication to guide market actors’ expectations of future rates of interest, inflation, and growth. However, aware of the pitfalls of (financial) central planning, central bankers used to draw a line by restricting their monetary policy interventions to short-term interest rates. Longer-term rates, they argued, reflected decentralised knowledge and should be determined by market forces. By embracing forward guidance and quantitative easing (QE) to target long-term rates, central banks have crossed that line. While consistent with the post-1980s expansion of the temporal reach of monetary policy into the future, these unconventional policies nevertheless mark a structural break – the return of hydraulic macroeconomic state agency, refashioned for a financialised economy.

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confidence: 99%

Central bank planning: Unconventional monetary policy and the price of bending the yield curve

Braun

2017

Preprint

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“…The ways in which graphical representations of models and their results may influence how these models are adopted is an important topic in the performativity literature; see, for instance,Pahl and Sparsam (2016) in the context of the IS-LM model.…”

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Three Ways in Which Pandemic Models May Perform a Pandemic

Basshuysen

White

Khosrowi

et al. 2021

EJPE

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Models not only represent but may also influence their targets in important ways. While models’ abilities to influence outcomes has been studied in the context of economic models, often under the label ‘performativity’, we argue that this phenomenon also pertains to epidemiological models, such as those used for forecasting the trajectory of the Covid-19 pandemic. After identifying three ways in which a model by the Covid-19 Response Team at Imperial College London (Ferguson et al. 2020) may have influenced scientific advice, policy, and individual responses, we consider the implications of epidemiological models’ performative capacities. We argue, first, that performativity may impair models’ ability to successfully predict the course of an epidemic; but second, that it may provide an additional sense in which these models can be successful, namely by changing the course of an epidemic.

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The Future of Performativity

Brisset

2017

oeconomia

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The IS–LMization of the General Theory and the Construction of Hydraulic Governability in Postwar Keynesian Macroeconomics

Cited by 3 publications

References 46 publications

Central bank planning: Unconventional monetary policy and the price of bending the yield curve

Central bank planning: Unconventional monetary policy and the price of bending the yield curve

Three Ways in Which Pandemic Models May Perform a Pandemic

The Future of Performativity

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