Rule- based frameworks in historical perspective: Keynes' and Friedman's monetary policies versus contemporary policy- rules

This paper compares Keynes' and Friedman's views on monetary policy in the light of contemporary views on this issue. First, it is demonstrated that what are today called rules' do not fit into a Friedmanite tradition, basically because of Friedman's refusal to allow any discretion to monetary authorities and his model-uncertainty argument. Second, it is shown that Keynes' monetary guidelines are also in fact rules', although his conception of a discretionary rule' is in sharp contrast with contemporary conceptions. What is ultimately at stake here is the capacity of collective bodies to behave efficiently, and the role played by uncertainty in the economy.