Flexible monetary policy rules from the Great Moderation to the New Normal Times (1993–2023): a forward-looking review

The never-ending debate on the optimal money elasticity and predictability, coupled with the recent wishes of the major central banks to normalize monetary policy, motivate this analysis. Its aim is to offer a review of the evolution of the modern concept of flexible monetary policy rules, from the seminal contribution of (Taylor, Carnegie-Rochester Conference Series on Public Policy 39:195–214, 1993) to nowadays. Four subsequent steps are implemented: after an excursus on the traditional rules versus discretion debate, the origin of the flexible rules is described, and then its evolution; finally, the opportunity to consider as a research perspective the role of the central bankers’ heterogeneity—in terms of personal preferences, including the behavioural biases—is highlighted. The more it is likely that psychology matters, the more a new motivation arises for a central bank to adopt a flexible rule.