How the Bundesbank enforced German austerity since the 1970s

In my article “One State, One Interest?”, Inga Rademacher advances a novel explanation for Germany’s early and enduring turn to fiscal austerity. Rather than attributing this shift solely to globalization or ideational change, the article foregrounds strategic conflicts within the state—specifically, between the Bundesbank and successive Social Democratic governments in the 1970s. Using an original process-tracing design and extensive archival evidence from the Bundesbank and the Federal Cabinet, Rademacher demonstrates that the breakdown of the Bretton Woods system marked a critical juncture that redistributed institutional power toward the central bank.

Freed from its obligations to defend the dollar–DM parity, the Bundesbank gained new autonomy over monetary policy—and used this to intervene in fiscal governance. The article introduces the concept of microstrategies to describe how central banks can expand their authority through targeted actions during moments of institutional flux. Two such strategies—overreach through the deployment of new monetary instruments, and bargaining through interest rate leverage—allowed the Bundesbank to discipline fiscal policy and push for the adoption of binding fiscal rules.

The article’s central claim is that austerity in Germany was not a coherent, state-led response to global pressures, but the result of intra-state contestation in a moment of international disruption. By integrating comparative and international political economy with historical institutionalism, Rademacher offers a new framework for understanding how technocratic institutions strategically consolidate power, particularly in the wake of global regime shifts like the end of Bretton Woods.