This article is a revised English translation of the Thunen Lecture, given at the Annual Congress of the Verein fur Socialpolitik, September 29, 2004, in Dresden, Germany.

This article was adapted from a speech of the same title presented at the First Conference of the Monetary Stability Foundation at the Regional Office of the Deutsche Bundesbank, Frankfurt, Germany, December 5, 2002.

Svensson (2003) argues strongly that specific targeting rules-first-order optimality conditions for a specific objective function and model-are normatively superior to instrument rules for the conduct of monetary policy. That argument is based largely on four main objections to the latter, plus...

In the United States and Europe, central banks have essentially been the only policymaking entities consistently willing and able to take bold measures to deal with an unusually complex set of national, regional, and global economic and financial challenges since the onset of the Great Recession...