ABSTRACT

Academic macroeconomics and monetary policy in central banks share a strong connection. But the practical needs and the epistemic cultures in both domains differ significantly so there is no straightforward dissemination of macroeconomic ideas into practical monetary policy making. Instead, academic macroeconomics and central banks have to be understood as autonomous domains of knowledge and power. We refer to two case studies concerning the Federal Reserve, the central bank of the USA, to reveal the context conditions of action in the respective domains that are responsible for the transition of knowledge between them. The first case shows the imminent failure of the project to popularize rational expectations in the Federal Open Market Committee. Rational expectations revolutionized academic macroeconomics but not monetary policy making. The second case shows how pragmatic needs facing a crisis led the Federal Open Market Committee to selectively adopt monetarist ideas. Both case studies draw on the verbatim transcripts of the meetings of the Federal Open Market Committee.