Moreover, the economy changes over time- this means that policymakers need to be able to adapt their models promptly and accurately in real time. And, finally, no one model or policy rule can capture the varied experiences and views brought to policymaking by a committee. All of these factors and more recommend against accepting the prescriptions of any one model, policy rule, or policymaker.
While this is laudable, it equally raises concerns about the potential for financial contagion, which could lead to economic instability and damage to society. This calls for vigilance and more collaboration in prudential surveillance, data analysis and sharpening of supervisory tools.