Adding rooms onto a house we love: Central banking after the Global Financial Crisis

This article examines the extent to which central bankers have been willing and able to rethink their beliefs about monetary policy in the wake of the Global Financial Crisis. We show that despite the upheaval, the core pre-crisis monetary policy paradigm remains relatively intact: central bankers believe that they should primarily pursue price stability through targeting low inflation in a transparent manner, and that they need operational independence to achieve this goal. In a bid to address post-crisis conditions and maintain their credibility, however, central bankers have also layered new elements onto the old core. We document both the resilience of pre-crisis beliefs and the process of layering using computer-assisted text analysis and qualitative analysis of 13,586 speeches given between 1997 and 2017 by central bankers from around the world.