Minsky’s moment? The rise of depoliticised Keynesianism and ideational change at the Federal Reserve after the financial crisis of 2007/08

Abstract

How did potentially transformative ideas about the way economies should function become enlisted in policy frameworks that produced few major changes to policy orthodoxy at the Federal Reserve after the financial crisis of 2007/08? IPE scholarship has tended to answer this question by identifying the limited purchase of Keynesian ideas in policy circles. In so doing, however, the existing literature has left unexplained the central role of Keynesianism in the Federal Reserve’s ideational framework. To fill a gap in this literature, this article argues that ideas fill different functions (cognitive and normative) in the policy process and proposes a new explanatory model, ‘depoliticised Keynesianism’, for understanding the role that Keynesian ideas played in ideational change at the Federal Reserve after the financial crisis of 2007/08. Using in-depth interviews with current and former Federal Reserve officials, and a quantitative text analysis of Federal Open Market Committee meeting transcripts between 1981 and 2014, it traces the rise of depoliticised Keynesianism to policymakers’ normative commitment to depoliticisation and a cognitive interpretation of Keynesian ideas.