[11] Robert J. Barro and David B. Gordon (1983a), “Rules, discretion and reputation in a model of monetary policy”, Journal of Monetary Economics, 12(1): 101-121; and (1983b), “A Positive Theory of Monetary Policy in a Natural Rate Model”, Journal of Political Economy, 91(4): 589-610.
That leaves aside the question of the capacity for effective macroprudential supervision, an issue we will take up as we begin to discuss the optimal conduct of monetary policy in the wake of the crisis, given the heightened attention of monetary policymakers to the importance of maintaining financial stability.