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Response to Comments

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journal contribution
posted on 2010-12-01, 00:00 authored by Allan MeltzerAllan Meltzer

Robin Matthews and James Tobin raised related issues about uncertainty and rules. One of the main policy implications of the type of rational expectations model discussed in my paper is that pure discretionary policy is generally inferior to a policy rule. A principal advantage of rules is that rules reduce costs of acquiring information and reduce uncertainty about current and future policies.




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