The Discursive Dilemma in Monetary Policy
AbstractThe discursive dilemma implies that the policy decision of a board of policymakers depends on whether the board reaches the decision by voting directly on policy (conclusion-based procedure), or by voting on the premises for the decision (premise-based procedure). We derive results showing when the discursive dilemma may occur, both in a general model and in a standard monetary policy model. When the board aggregates by majority voting, a discursive dilemma can occur if either (i) the relationship between the premise and the decision is non- monotonic, or (ii) if the board members have di¤erent judgments on at least two of the premises. Normatively, a premise-based procedure tends to give better decisions when there is disagreement on parameters of the model.
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Bibliographic InfoPaper provided by Sveriges Riksbank (Central Bank of Sweden) in its series Working Paper Series with number 240.
Length: 37 pages
Date of creation: 01 Apr 2010
Date of revision:
Discursive dilemma; Monetary policy; MPC; Policy boards;
Other versions of this item:
- D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-15 (All new papers)
- NEP-CBA-2010-05-15 (Central Banking)
- NEP-MON-2010-05-15 (Monetary Economics)
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- Lars E. O. Svensson, 2011.
"Practical Monetary Policy: Examples from Sweden and the United States,"
Brookings Papers on Economic Activity,
Economic Studies Program, The Brookings Institution, vol. 42(1 (Spring), pages 289-352.
- Lars E.O. Svensson, 2012. "Practical Monetary Policy: Examples from Sweden and the United States," NBER Working Papers 17823, National Bureau of Economic Research, Inc.
- Maurin, Vincent & Vidal, Jean-Pierre, 2012. "Monetary policy deliberations: committee size and voting rules," Working Paper Series 1434, European Central Bank.
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