However, naturally enough, the earliest models in this genre have tended to be highly simplified representations of the economy, only loosely matched to the data. Like the models themselves, the optimal policy rules derived in the models are often unrealistically simple.
For example, in some of these models, strict inflation targeting - a policy of keeping inflation at zero at all times - is the optimal policy. To make these models relevant for applied policy analysis, the natural next step is to add new frictions and more complex dynamics to the benchmark models.