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The importance of rules-based monetary policy in practice
Institution:1. Dept. Zoology and Anthropology, Constantine the Philosopher University, 949 74 Nitra, Slovakia;2. Dept. Genetics and Reproduction, Research Institute of Animal Production, 949 59 Lužianky, Slovakia;3. Universitäts-Frauenklinik, 50931 Köln, Germany;4. Zoology Department, College of Science, King Saud University, Riyadh, Saudi Arabia;1. Eindhoven University of Technology, Den Dolech 2, Eindhoven 5612AZ, Netherlands;2. Philips Research Eindhoven, High Tech Campus 34, Eindhoven 5656AE, Netherlands;1. Department of Medicine, University of Auckland, Private Bag 92 019, Auckland 1142, New Zealand;2. Health Services Research Unit, University of Aberdeen, Foresterhill, Aberdeen AB25 2ZD, Scotland
Abstract:This paper draws on several actual policy experiences of the author to demonstrate why it is important to have a rules-based monetary policy. These experiences show that policy rules provide a needed “steady as you go” strategy and serve as an insurance against excessive intervention. They also show why in practice one must consider rules-based policy in the broader policy context in which the Federal Reserve operates.
Keywords:Monetary policy  Taylor rule  Bailout  Wage and price controls
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