Among the policy officials in the recipient countries, the flows (and the development of sophisticated financial sectors) were a sign of progress and modernity: who would want to express doubts about that? In academic circles, the dominant paradigm was “efficient markets” – who would be bold enough to question the outcome of the market?
Many variations have been proposed and their properties investigated. Almost all the simple rules that have been found to be robust over a range of models have very similar constructions and can be expressed as variants of Taylor’s original specification. Of course, the Fed has never adopted a formal reaction function or simple rule for setting monetary policy.