Commentary

Abstract

Edmund Phelps’ article reviews coercive rules for monetary policy. Since Friedman’s proposal of a simple k% money rule, economists have come up with a great variety of more sophisticated rules. A common objective of all rules is to hinder the agent central bank from producing permanent inflation, while some rules aim in addition at enforcing a certain degree of employment stabilization. There is no ideal rule, of course; each rule has its merits as well as drawbacks, as Phelps points out. Consequently, it seems we need a comparative evaluation in order to determine which of the various proposals is the most promising in terms of a lasting welfare gain to the central bank’s principal, the private sector.