The Art of Monetary Policy

Economics is a science of thinking in terms of models joined to the art of choosing models which are relevant to the contemporary world. It is compelled to be this, because, unlike the typical natural science, the material to which it is applied is, in too many respects, not homogeneous through time.

— John Maynard Keynes, letter to Roy Harrod, 4 July 1938

Almost 20 years ago, Richard Clarida, Jordi Galí and Mark Gertler published a seminal article in the Journal of Economic Literatureentitled “The Science of Monetary Policy: A New Keynesian Perspective,” which quickly became required reading for students of monetary economics and aspiring central bankers alike. The trio summarized the theoretical macroeconomic framework for analyzing inflation targeting and interest rate rules that has been utilized by many central banks around the world over the past few decades.

Read on (source and credit)

https://www.pimco.co.uk/en-gb/insights/economic-and-market-commentary/macro-perspectives/the-art-of-monetary-policy