But recent experience, along with the earlier experience of the 1970s, suggests that uncertainty about the real equilibrium interest rate and about the level of potential output makes implementing the policy rule challenging. Just as modelbased forecasters often look at forecasts from VARs, so policymakers under a policy rule might benefit from a second check provided by a money-growth reference value.
However, a bail-out of pension fund members should always remain the last option for two well-known reasons: it is costly to taxpayers and it may encourage opportunistic behaviour by pension funds in the future. A more sustainable and efficient form of protection could come from some kind of collective inter-generational arrangement.