I believe that Kydland and Prescott, as well as Barro and Gordon have been very convincing. In my opinion, we should discuss the possibility of giving equal weight to the rules and the need for a flexible response to specific events; these events are the ones precisely not considered in the design of those rules due to their low likelihood of occurrence.
In policy design, monetary authorities should explicitly try to avoid ex ante the emergence of imbalances that could lead to financial instability. The aim is to “reduce the frequency and severity of bouts of financial instability in the future”, as Ben Bernanke argues. Recent literature has shown results that are ambiguous or even contrary to those yielded by the usual “technology”.