NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
loading...

Making Discretion in Monetary Policy More Rule-Like

Frederic S. Mishkin

NBER Working Paper No. 24135
Issued in December 2017
NBER Program(s):The Economic Fluctuations and Growth Program, The Monetary Economics Program

This paper argues that the rules versus discretion debate has been miscast because a central bank does not have to choose only between adopting a policy rule versus pure discretion, both of which have serious shortcomings. Rather it can choose a constrained discretionary regime that has rule-like attributes. Monetary policy discretion can be made more rule-like, by 1) adopting a nominal anchor such as an inflation target, and 2) communication of a monetary policy reaction process, especially through data-based forward guidance, in which the monetary policy authorities describe how the future policy path will change as economic circumstances change.

download in pdf format
   (171 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w24135

Users who downloaded this paper also downloaded* these:
Hall and Sargent w24148 Short-Run and Long-Run Effects of Milton Friedman's Presidential Address
Taylor w24149 Rules Versus Discretion: Assessing the Debate Over the Conduct of Monetary Policy
Gertler, Kiyotaki, and Prestipino w24126 A Macroeconomic Model with Financial Panics
Bordo w24154 An Historical Perspective on the Quest for Financial Stability and the Monetary Policy Regime
Eggertsson, Juelsrud, and Wold w24039 Are Negative Nominal Interest Rates Expansionary?
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us