Federal Reserve Vice Chairman Stanley Fischer on Monetary
Policy Rules:
“My take is that rules
are extremely useful reference tools, but they are likely to work best as
inputs into a committee decision. Why? … First, the economy is very complex,
and models that attempt to approximate that complexity can sometimes let us
down. A particular difficulty is that expectations of the future play a
critical role in determining how the economy reacts to a policy change.
Moreover, the economy changes over time--this means that policymakers need to
be able to adapt their models promptly and accurately in real time. And,
finally, no one model or policy rule can capture the varied experiences and
views brought to policymaking by a committee. All of these factors and more
recommend against accepting the prescriptions of any one model, policy rule, or
policymaker.”
My perspective on the topic can be found here:
http://www.scirp.org/journal/PaperInformation.aspx?PaperID=72991
http://www.scirp.org/journal/PaperInformation.aspx?PaperID=72991