This paper reviews the distinction between the timeless perspective and discretionary modes of monetary policymaking, the former representing rule-based policy as formalized by Woodford (1999). In models with forward-looking expectations, this distinction is important because discretionary...

After a brief review of key developments in application of monetary theory to policy analysis, Bennett T. McCallum describes the central aspects of the typical framework used to analyze monetary policy rules. He reviews the methods used to study the effects of policy behavior and provides an...