John Taylor on Monetary Instruments

4/27/2013 11:17:00 AM
Is it me?

John Taylor has a blog post in which he argues that monetary policy "instruments" are more important than the "goal:"
"In the midst of all this debate, there is a crucial issue which explains much of the enormous difference of opinion between critics and supporters of the Fed’s current policy. Critics such as me and Allan Meltzer (who also testified at the JEC) argue that monetary policy should focus on a clear strategy for the instruments of policy. A goal for inflation or other measures of macro performance is not enough if it is simply part of a whatever-it-takes approach to the instruments."
This is John Taylor, of Taylor Rule fame. Wasn't this the guy who used to always argue that monetary instruments didn't matter, because if the Fed followed a rules-based policy they'd never have to use those instruments in a big way? After all, the Taylor Rule for which he's famous is nothing more than a goal, not an instrument. And to the best of my knowledge, none of John Taylor's models incorporates any monetary instruments of any kind--in his papers, the Fed's target goals are always achieved by fiat.

So my question is, is it me? Have I been missing some part of John Taylor's research where he shows that it matters how the Fed achieves its policy goals?