They need some variable or variables to serve as a warning signal that a change is policy is desirable. The only question is which variable or variables do the best job of predicting the future course of economic activity. Some established predictive indicators are the Index of Leading Economic Indicators, Diffusion Indexes, Yield Curves, the Index of Coincident Indicators, and the Index of Lagging Indicators. The second type of indicator shows the effectiveness of policies after decision-makers have implemented their chosen action. They follow from specific policy actions and tell policy makers if the direction and magnitude of the chosen action is having the desired effect on the general level of economic activity.
Some economists also debate the merits of indicators for policy effectiveness.
However, most economists agree that some indicator is necessary. Future policies depend upon the current thrust of past policies. The only question is which variable or variables do the best job in signaling to policy makers the effectiveness of policy decisions. The best indicator variables depend upon the type of policy and whether the expected transmission mechanism is Monetarist or Keynesian.