Flexible rules cum constrained discretion: a new consensus in monetary policy

This paper demonstrates that recent influential contributions to monetary policy imply an emerging consensus whereby neither rigid rules nor complete discretion are found optimal. Instead, middle-ground monetary regimes based on rules (operative under 'normal' circumstances) to anchor inflation expectations over the long run, but designed with enough flexibility to mitigate the short-run effect of shocks (with communicated discretion in 'exceptional' circumstances temporarily overriding these rules), are gaining support in theoretical models and policy formulation and implementation. The opposition of 'rules versus discretion' has, thus, reappeared as the synthesis of 'rules cum discretion', in essence as inflation-forecast targeting. But such synthesis is not without major theoretical problems, as we argue in this contribution. Furthermore, the very recent real-world events have made it obvious that the inflation targeting strategy of monetary policy, which rests upon the new consensus paradigm in modern macroeconomics is at best a 'fair weather' model. In the turbulent economic climate of highly unstable inflation, deep financial crisis and world-wide, abrupt economic slowdown nowadays this approach needs serious rethinking to say the least, if not abandoning it altogether

Speech perception and phonological short-term memory capacity in language impairment: preliminary evidence from adolescents with specific language impairment (SLI) and autism spectrum disorders (ASD)

Background: The cognitive bases of language impairment in specific language impairment (SLI) and autism spectrum disorders (ASD) were investigated in a novel non-word comparison task which manipulated phonological short-term memory (PSTM) and speech perception, both implicated in poor non-word repetition. Aims: This study aimed to investigate the contributions of PSTM and speech perception in non-word processing and whether individuals with SLI and ASD plus language impairment (ALI) show similar or different patterns of deficit in these cognitive processes. Method & Procedures: Three groups of adolescents (aged 14–17 years), 14 with SLI, 16 with ALI, and 17 age and non-verbal IQ matched typically developing (TD) controls, made speeded discriminations between non-word pairs. Stimuli varied in PSTM load (two- or four-syllables) and speech perception load (mismatches on a word-initial or word-medial segment). Outcomes & Results: Reaction times showed effects of both non-word length and mismatch position and these factors interacted: four-syllable and word-initial mismatch stimuli resulted in the slowest decisions. Individuals with language impairment showed the same pattern of performance as those with typical development in the reaction time data. A marginal interaction between group and item length was driven by the SLI and ALI groups being less accurate with long items than short ones, a difference not found in the TD group. Conclusions & Implications: Non-word discrimination suggests that there are similarities and differences between adolescents with SLI and ALI and their TD peers. Reaction times appear to be affected by increasing PSTM and speech perception loads in a similar way. However, there was some, albeit weaker, evidence that adolescents with SLI and ALI are less accurate than TD individuals, with both showing an effect of PSTM load. This may indicate, at some level, the processing substrate supporting both PSTM and speech perception is intact in adolescents with SLI and ALI, but also in both there may be impaired access to PSTM resources.