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The Discursive Dilemma in Monetary Policy

  • Claussen , Carl Andreas

    ()

    (Monetary Policy Department, Central Bank of Sweden)

  • Røisland, Øistein

    ()

    (Monetary Policy Department)

The 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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Paper provided by Sveriges Riksbank (Central Bank of Sweden) in its series Working Paper Series with number 240.

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Length: 37 pages
Date of creation: 01 Apr 2010
Date of revision:
Handle: RePEc:hhs:rbnkwp:0240
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