Purpose: The objective of conducting this study is to scrutinize more effective monetary policy rules for developing countries like Pakistan. In addition, to determine whether the monetary policy would have been more welfare enhancing had the interest rate been utilized as the policy rule instead of money supply in a calibration analysis of Pakistan’s monetary policy transmission mechanism. Design/Methodology/Approach: Calibration analysis was conducted for quarterly data from 1992Q3 to 2017 Q2 based on Pakistan Dynamic Stochastic General Equilibrium model, using parameters of the Taylor rule and the money supply rule. Findings: Counterfactual experiments by using money supply as an optimal policy instrument were undertaken in the study that the money supply rule increases volatility in output and inflation. On the other hand, volatility in inflation and output was fouund to be minimal in the Taylor rule implying that the price rule outperforms the money supply rule and it converges to a steady state. Implications/Originality/Value: The outcome of the present academic exercise is, fortunately, consistent with the rule being followed by the State Band of Pakistan. Even though a rare outcome this has to be the case in all policy areas.