Monetary Policy: Rules vs. Discretion
Published on: November 25, 2019
Sound monetary policy is essential for strong economic growth and stability. Monetary policy is often only noticeable when the Federal Reserve gets it wrong, as it has several times in recent history. In order to get it right, it helps to follow a rules-based policy instead of one based on discretion.
- Why has discretionary monetary policy replaced rules-based monetary policy at various points in our history?
- What would cause the Federal Reserve to adopt a discretionary policy?
- Read John Taylor’s chapter “National and International Monetary Reform” in Blueprint for America here.
- Read The Taylor Rule and the Transformation of Monetary Policy, available here.
- Read Rules for International Monetary Stability: Past, Present, and Future by Michael D. Bordo and John B. Taylor, available here.