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The European Central Bank: From a Price Stability Paradigm to a Multidimensional Stability Paradigm

Author

Listed:
  • Lucia Quaglia

    (Department of Political and Social Sciences, University of Bologna, Italy)

  • Amy Verdun

    (Department of Political Science, University of Victoria, Canada / Institute of Political Science, Leiden University, The Netherlands)

Abstract

This article maps and explains the shift in economic thinking at the European Central Bank (ECB), i.e., its “ideational” evolution over the past two decades. When the ECB was set up in 1999 its institutional design and epistemic outlook were very much inspired by the legacy of the German central bank, the Bundesbank. Thus, the ECB embraced a “price stability” paradigm that prioritized inflation control. However, over time, policy learning in response to economic shocks (first and foremost, a series of consecutive financial and economic crises from 2008 onwards) and the internal organic evolution of the ECB have led to a shift of economic thinking at the Bank, which has also been reflected by its policy actions. The new paradigm can be characterized as a “multidimensional stability” paradigm. By relying on inter alia secondary literature, speeches, semi-structured elite interviews, and data we collected concerning the previous experience at national central banks of senior ECB staff, we identify a novel causal mechanism for ideational change at the Bank: the change in the composition of senior managerial staff from 1999 onward.

Suggested Citation

  • Lucia Quaglia & Amy Verdun, 2025. "The European Central Bank: From a Price Stability Paradigm to a Multidimensional Stability Paradigm," Politics and Governance, Cogitatio Press, vol. 13.
    • Handle: RePEc:cog:poango:v13:y:2025:a:8920
    DOI: 10.17645/pag.8920
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    References listed on IDEAS

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