Part 6/12:
Addressing concerns about the lack of strict rules guiding monetary policy, Hassett asserts that rules can be effective only if they are sound. He critiques models like the Phillips curve, which link unemployment to inflation, citing that such relationships are often unreliable due to conflicting demand and supply factors influencing the economy. Instead, he advocates for a data-dependent approach, considering a range of models and opinions to inform policy—what he considers a prudent and flexible methodology.