The Discursive Dilemma in Monetary Policy
32 Pages Posted: 13 Jun 2014
Date Written: July 2014
The discursive dilemma implies that the decision of a board depends on whether the board votes directly on the decision (conclusion‐based procedure) or votes on the premises for the decision (premise‐based procedure). We derive results showing when the discursive dilemma might occur. Under majority voting, a discursive dilemma can occur either (i) if the relationship between the premise and the decision is non‐monotonic, 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.
Keywords: Discursive dilemma, monetary policy, monetary policy committee, policy boards
JEL Classification: D71, E52, E58
Suggested Citation: Suggested Citation