(FORTUNE Magazine) – Smart manufacturers these days don't give a supplier blueprints for parts; they set performance targets and let the supplier figure out how best to meet them. Is that the way monetary policy should be run? Central bankers and economists meeting in Jackson Hole, Wyoming, at this year's annual conclave, hosted by the Federal Reserve Bank of Kansas City, heard persuasive evidence that the answer is yes. For years economists argued over two types of monetary blueprint. The ''discretion'' camp favored actively tweaking interest rates to promote high growth, low unemployment, and moderate inflation. The ''rules'' crowd argued that a central bank could do better by increasing the money supply at a steady rate no matter what. Neither has worked. Enter the new generation of rules makers, exemplified by tiny New Zealand, once a chronic case of economic policy gone awry (inflation in the 1980s averaged more than 11% a year). In 1990 its Parliament ordered the central bank to make price stability its No. 1 goal. If agreed-on inflation targets are missed, the bank's governor gets the boot. The first targets: inflation of 1% to 2% by 1992. As the chart shows, so far, so good. The Bank of Canada has followed a similar program since 1991 and has hit its targets. Why not do the same in the U.S.? Fed Chairman Alan Greenspan has long talked about achieving price stability, and he's gotten partway there. Debating a goal publicly could clarify just how much pain in terms of tethered economic growth the country is willing to accept to keep prices under control.

CHART: NOT AVAILABLE CREDIT: FORTUNE CHART/SOURCES: BLS; OECD; EMBASSIES OF CANADA AND NEW ZEALAND CAPTION: INFLATION