Rule vs. Discretionary Monetary Policy: A Theoretical Analysis toward Selecting Appropriate Strategy
Abstract
A strategic question on monetary policy is whether monetary policy should follow recognized and predetermined rules, or be left to discretion of policymakers. This paper studies the viewpoints of various economists before comparing regulation vs. discretion as a basis for monetary policies. Finally, a suitable policy strategy which is accepted by most economists and policymakers is introduced. In view of results and given economic conditions of Iran, a combination of regulation and discretion is recommended to guide Iran’s monetary policy
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