I believe that the reduction in fluctuations is mainly the result of a rule-based policy that focused more attention on the medium-term than on current data.
Kydland and Prescott (1977) show why rule-based policy achieves better results than discretion.
The move towards rule-based policy
from a discretion-based one will bring more clarity to how policy works.
It evaluates the situation and, combined with intelligence from the MSR, makes decisions using a sophisticated, rule-based policy
Thus, he proposes a rule-based policy
Topics include a quantitative approach to IT investment allocation, a distributed tabling algorithm for rule-based policy
systems, a basis for comparing characteristics of policy systems, and policy languages for digital identity management in federation systems.
Only this last rationale seems generally valid to justify rule-based policy in EMU.
The proponents of rule-based policy have a point, however, when they suggest that politics is often the enemy of good economics.
The pressure on regulators to relax the rule would be intense, and investors anticipating a cave-in to the pressure might treat the rule-based policy as though it were a discretionary policy.
In that event, the credibility problem associated with the Wall proposal also applies to the Calomiris plan: if the market does not believe the rule-based policy is credible, then it will treat it as though it were a discretionary policy.
It might be thought that adoption of a rule-based policy
involves a once-and-forever choice of the contingency plan (i.
Often enterprises rely on signature-based IPS or rule-based policy
management systems to identify viruses or malware and provide network access control to various endpoints.