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One of the hot topics in monetary economics is whether policy makers should be constrained by rules or use discretion. Advocates of discretion argue that the Fed should react to developments in the economy using its best judgment at the time. By contrast, rules advocates argue that policy makers are not very adept at managing the economy, that they are influenced by politicians, and that they may pursue policies that boost economic performance in the short term at the expense of long-term economic stability. This chapter examines the new Fed chairman's position on the matter. This chapter is excerpted from ‘Ben Bernanke's Fed: The Federal Reserve After Greenspan'.