The Discursive Dilemma in Monetary Policy

Riksbank Research Paper Series No. 71

Sveriges Riksbank Working Paper Series No. 240

34 Pages Posted: 28 May 2010

See all articles by Carl Andreas Claussen

Carl Andreas Claussen

Sveriges Riksbank

Øistein Røisland

Norges Bank - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: April 20, 2010

Abstract

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 nonmonotonic, or (ii) if the board members have different 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.

Suggested Citation

Claussen, Carl Andreas and Røisland, Øistein, The Discursive Dilemma in Monetary Policy (April 20, 2010). Riksbank Research Paper Series No. 71, Sveriges Riksbank Working Paper Series No. 240, Available at SSRN: https://ssrn.com/abstract=1601868 or http://dx.doi.org/10.2139/ssrn.1601868

Carl Andreas Claussen (Contact Author)

Sveriges Riksbank ( email )

Brunkebergstorg 11
SE-103 37 Stockholm
Sweden

Øistein Røisland

Norges Bank - Department of Economics ( email )

P.O. Box 1179
Oslo, N-0107
Norway
+47 22 31 67 39 (Phone)
+47 22 31 60 50 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
35
Abstract Views
636
PlumX Metrics