This is going to sound positively neandthal, but shouldn't the left hand side of a policy rule be something that policy makers have direct - not indirect - control over?
Friedman was on to something, I think - although not quite.
A money supply rule doesn't quite cut it because money supply is endogenous, so unless you're talking about base money that won't work.
Taylor rules or other interest rate rules obviously don't work - still indirect.
NGDP rules obviously don't work.
Why don't we have rules with OMO volume on the left hand side?
Put NGDP levels or price levels or whatever else you want on the right.
This is another way of putting my old criticism that NGDP level targeting proponents often confuse goals and policies.
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