No official money has been tied to gold (or any other real asset) since 1971, and during this time one rule-based policy
after another has been adopted and eventually jettisoned.
We return to this central idea to show how a central bank can achieve the gains of a rule-based policy
without publicly stating a specific rule.
is one useful mechanism to enhance the credibility of commitment, but it is not perfect.
The move towards rule-based policy
from a discretion-based one will bring more clarity to how policy works.
Thus, he proposes a rule-based policy
In the short-run discretionary policy is preferred to rule-based policy
for two reasons: first, the Governors of the Bank of England are quite able to decide for themselves what is the best course of action, what is going to happen next, and second
For a rule-based policy
to be successful, it must be credible so that economic agents can fairly safely assume that decision-makers will actually follow their announced response pattern.
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.
See Svensson (2001) for a more extensive discussion of rule-based policy
Decker, Warren and John Morello, "The American Debate Association: Rule-Based Policy
Debate," Argumentation and Advocacy 27 (1990): 58-67.
10) Until the public was able to observe low inflation and relatively stable nominal GDP growth for a considerable length of time, the credibility of a rule-based policy
would likely depend on the public's ability to verify that the monetary authority was actually following the rule when setting targets for money growth.