Variety of Financialization and Central Banks
FFJ / Banque de France fellowship workshop

Tuesday 6 December 2022 - 14:30 to 16:30
EHESS - 54 boulevard Raspail 75006 Paris - Room n° BS1_05 (level -1)
In English

This workshop examines the links between the types of financialization and politics associatedwith monetary policy choices of central banks. The shape of financialization, where expanding
size and importance of financial sector in the overall economy among the wealthy countries,
varies among countries. Such variation arises from multiple sources including the institutional
differences, interaction between the financial sector and non-financial corporations, as well as
choice of household finances. Central banks’ monetary policy, particularly its asset purchasedecisions takes into consideration of politics of financialization as well as the opposite forces
demanding correcting income inequality. By comparing the cases of Japan with European
economies, the project seeks to identify how central bank policies are affected by the different
types of financialization and distribution/redistribution considerations.
The workshop gathers European experts on financialization and central banking. We will
investigate the relationship between the type of financialization and how asset purchases havebeen conducted by national central banks and the European Central Banks during the recessionof the 2010s and under the Covid crisis. At the same time, such support for the “haves” also leads
to political backlash and calls for more serious distribution and redistribution policies.
The workshop is funded by the FFJ / Banque de France Fellowship and the Center forInternational Studies of the University of Southern California.

Mandatory registration :https://docs.google.com/forms/d/e/1FAIpQLSf8dz1Wg8baMje8LDduuC03oz8RSpdVw2z9vqwh
GYHL5dQ2dw/viewform
Contact: jodie.cazau@ehess.fr

Program

14:30-16:15

Roundtable on Financialization and Monetary Policy

Panelists (alphabetical order):Gabrielle Cheung (Brunel University London)
Jeffrey Chwieroth (London School of Economics):
Sebastien Lechevalier (EHESS)
Manuela Moschella (Scuola Normale Superiore):
Matthias Thiermann (Science Po):
Moderator:

Saori N. Katada (USC)

16:15-16:30

Wrap-up session and closing

16:30 to 18:00 Reception
EHESS - 54 boulevard Raspail 75006 Paris - Hall of the EHESS building, ground floor****Speakers, discussants and moderators
Gabrielle Cheung (Brunel University London)
Biography - Gabrielle Cheung is a Lecturer in Global Challenges at Brunel University London.
Her research focuses on international and comparative political economy, with an emphasis on
the politics of trade liberalization, central banking, and inequality. She received her Ph.D. in
Political Science and International Relations from the University of Southern California in May
2021. During the 2021-2022 academic year, she was a Postdoctoral Fellow with the Program onU.S.-Japan Relations at Harvard University’s Weatherhead Center for International Affairs. Priorto graduate school, she worked at the University of Hong Kong’s Department of Politics and PublicAdministration (2011-2016), and held a visiting position at the United Nations University’s Instituteon Computing and Society (2016).
Paper - States for Markets: Financialisation, Wealth Preservation, and Political Pressure
on Central Banks (Co-authors: Saori N. Katada, University of Southern California, andGene Park, Loyola Marymount University)
How does financialisation affect monetary policy? This article provides one of the first analysesof the determinants and impact of political pressure on central bank asset purchases. We argue
that financialisation has strengthened electoral incentives for legislators to protect the interests ofvoters and firms by pressuring the central bank to increase equity-linked asset purchases in timesof market distress. We explore financialisation and central bank asset holdings from acomparative perspective and with a focus on Japan, where the central bank has developed oneof the world’s largest holdings. Evidence from a new 1998-2022 dataset addressing the full period
since the Bank of Japan gained de jure independence shows that market declines are robustlyassociated with increased pressure on the Bank through legislative summonses. Market declines
moreover strengthen the effect of summonses on the Bank’s net purchases of exchange-tradedfunds when summonses involve deliberations about such purchases. Committee transcripts
reveal that conservative legislators either support or remain silent about such purchases, while
legislators from left-leaning parties often express concern about the Bank’s mounting exposure
to equities. These findings show that political elites face growing difficulties in concurrently
preserving mass wealth, maintaining financial stability, and mitigating moral hazard.

Jeffrey Chwieroth (London School of Economics)
Paper - When Central Banking Becomes Costly: Financialization and Public Opinion on
Unconventional Monetary Policies
In the decade after the global financial crisis, central banks in advanced economies implemented
a range of unconventional monetary policies (UMPs), including large-scale asset purchases(“quantitative easing”) and ultra-low or even negative interest rates. Many advanced economies
came to rely on these UMPs, as they combated secular stagnation tendencies while theirgovernments implemented contractionary fiscal policies. The use of UMPs intensified in the wakeof the COVID-19 pandemic. Unconditional monetary policies have significant distributional effects.
While they increase output and employment and lower interest payments on debt, they havenegative effects on household wealth stored in deposits and other fixed-income investments.
UMPs may also boost asset prices, benefitting those households with wealth stored in bonds,
equities, and housing. Due to these distributive consequences, UMPs became increasinglycontested. Especially in the eurozone, the European Central Bank’s (ECB) asset purchases andnegative interest rate policy became already heavily politicized in the wake of the eurozone crisis.
The rise of inflation after the pandemic further exacerbated tensions and strengthened calls toend UMPs. Despite the distributive consequences and the politicization of UMPs, the politicalimplications remain poorly understood. We study the distributive consequences and politicalimplications of UMPs by using two survey experiments: a conjoint experiment and a framingexperiment. We embedded these experiments in a survey of a nationally representative sample
in Germany and the Netherlands, conducted before and after the first meeting of the Governing
Council of the ECB in 2022 (3 February 2022). The conjoint experiment has been designed toassess respondent views about interest rates, quantitative easing, and forward guidance. Since
we expected (and find) that people respond most strongly to changes in the interest rate, thesubsequent framing experiment further examined public opinion towards them. In particular, westudy views towards negative interest rates (NIRs), which the ECB implemented from 2014 to2022. By exposing respondents to different frames, we assess the importance of individual andcollective self-interest, including interests linked to financialization via borrowing costs and asset
prices, as well as inequality considerations for individual perceptions of NIRs. We also consider
how financialization, most notably asset ownership and debt obligations, moderates individual
views about UMP and NIRs.
Biography - Jeffrey Chwieroth is Head of the Department of International Relations and Professorof International Political Economy, as well as co-investigator of the Systemic Risk Centre andfaculty affiliate of the Phelan United States Centre at the London School of Economics andPolitical Science. He is the author of The Wealth Effect: How the Great Expectations of the Middle
Class Have Changed the Politics of Banking Crises (Cambridge University Press, 2019, withAndrew Walter, University of Melbourne) and Capital Ideas: The IMF and the Rise of FinancialLiberalization (Princeton University Press, 2010). He has published numerous articles and bookchapters on the political economy of international money and finance. His research has been
supported by grants from the Australian Research Council, the AXA Research Fund, the British
Academy for the Humanities and Social Sciences, and the Economic and Social ResearchCouncil.

Saori Katada (University of Southern California)
Biography - Saori N. Katada is Professor of Political Science and International Relations
Department at University of Southern California and vice president of International Studies
Association (April 2021-March 2022). Her new book Japan’s New Regional Reality: Geoeconomic
Strategy in the Asia-Pacific was published by Columbia University Press in July 2020. She is alsoa co-author of two recent books: The BRICS and Collective Financial Statecraft (Oxford UniversityPress, 2017), and Taming Japan’s Deflation: The Debate over Unconventional Monetary Policy(Cornell University Press, 2018). She has her Ph.D. from the University of North Carolina atChapel Hill (Political Science), and her B.A. from Hitotsubashi University (Tokyo). Before joining
USC, she served as a researcher at the World Bank in Washington D.C., and as an International
Program officer at the UNDP in Mexico City.

Sébastien Lechevalier (EHESS)
Biography - Sébastien Lechevalier is an Economist and a Professor at EHESS (School ofAdvanced Studies in the Social Sciences, Paris), specialised in Japanese economy and Asian
Capitalisms. He is also founder and president of the Fondation France-Japon de l’EHESS (FFJ).
Trained as a labor economist, he has extensively published on various dimensions of theJapanese economy, in comparative perspective, including: “Lessons from the Japaneseexperience. Towards an alternative economic policy?” (ENS Editions, 2016). His book, The Great
Transformation of Japanese Capitalism (Routledge, 2014) was published in three languagesand
has been cited as one of the most influential ones on the Japanese economy published during
the last decade. Other research interests include innovation (Innovation beyond technology,Springer, 2019), industrial policies (“Financialization and industrial policies in Japan and Korea:
Evolving complementarities and loss of state capabilities” in Structural Change and EconomicDynamics, 2019, Vol. 48), and inequalities & redistribution (“Decomposing Preference forRedistribution. Beyond the Trans-Atlantic Perspective”, forthcoming). For more than a decade, heis involved in SASE, as a participant and an organizer.

Manuela Moschella (Scuola Normale Superiore)
Biography - Manuela Moschella is Associate Professor of International Political Economy at the
Scuola Normale Superiore and Associate Fellow at the Europe Programme at ChathamHouse. She is also an associate editor of the Routledge Studies in Globalisation Series. She
previously served as the Chair of the International Political Economy Section (IPE) of theInternational Studies Association (ISA) (2019-2020) and as member of the Steering Committeeof the ECPR Standing Group of International Relations. Moschella was a Senior Fellow at theCentre for International Governance Innovation (2013-2017)) and member of the committee forthe Hedley Bull Prize in International Relations (2016-2018). She has been a visiting researcher
at the Johns Hopkins University, Copenhagen Business School, and George Washington
University. Her research focuses on the relationship between technocracy and politics, the roleof institutions and economic ideas in economic policymaking, the politics of macroeconomic andfinancial regulatory choices. Current research interests include central banks’ relationship with
political and societal actors, financial regulation and regulatory agencies, and international
economic cooperation.
Paper - What do politicians think of technocratic institutions? Experimental Evidence on
the European Central Bank
Technocracy is often regarded as a threat to democracy. Significant attention has therefore been
devoted in exploring the extent and motivations of public attitudes towards technocracy. Electedpolicymakers’ attitudes have instead not been as systematically investigated. This paper fills thisgap by investigating policymakers’ attitudes towards a distinct set of technocratic institutions:central banks. In particular, based on novel data from an elite survey of the Members of theEuropean Parliament (MEPs) during the Covid-19 crisis in order to gauge elected policymakers’
attitudes towards the European Central Bank’s mandate and policy conduct. Our findings showthat politicians’ attitudes are largely driven by the ideological stance of MEPs. However, theanalysis also shows the importance of cuing and framing effects. In particular, the findings showthat MEPs take clue from local macroeconomic conditions in order to develop their evaluation of
the importance of the ECB’s primary mandate vis-à-vis its secondary objectives. Furthermore, weprovide evidence that politicians’ trust towards the central bank is negatively correlated with the“hawkish” information the central bank provides to explain its policy choices.

Matthias Thiermann (Science Po)
Biography - Matthias Thiemann is a sociologist, with close affinities to political economy. On theone hand, he is analyzing the attempts of financial regulators in Europe and the US to control therisk taking behavior of agents in the financial industry, an attempt complicated by the fact thatthese agents gain from evading such control. On the other hand, Matthias Thiemann isinvestigating post-crisis regulatory changes in the US asking why certain ideas that gained
prominence post-crisis are translated into policy tools, while others are eschewed by policy
makers. Methodologically, he is drawing on expert interviews and document analysis, but also
citation network analysis and topic modeling.

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