The Greenspan Era: Discretion, Rather than Rules

Policy rules . . . anticipate that key causal connections observed in the past will remain fixed over time. . . . But we have found that very often historical regularities have been disrupted by unanticipated change. . . . The evolving patterns mean that the performance of the economy under any rule, were it to be rigorously followed, would deviate from expectations. . . . In an ever changing world, some element of discretion appears to be an unavoidable aspect of policymaking. Alan Greenspan (1997)