Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/210030 
Year of Publication: 
2013
Series/Report no.: 
Working Paper No. 2013/07
Publisher: 
Norges Bank, Oslo
Abstract: 
Modern central banks do not only announce the interest rate decision, they also communicate a "story" that explains why they reached the particular decision. When decisions are made by a committee, it could be difficult to find a story that is both consistent with the decision and representative for the committee. Two alternatives that give a unique and consistent story are: (i) vote on the interest rate and let the winner decide the story, (ii) vote on the elements of the story and let the interest rate follow from the story. The two procedures tend to give different interest rate decisions and different stories due to an aggregation inconsistency called the "discursive dilemma". We investigate the quality of the stories under the two approaches, and find that alternative (ii) gives stories that tend to be closer to the true (but unobservable) story. Thus, our results give an argument in favour of premise-based, as opposed to conclusion-based, decisionmaking.
Subjects: 
monetary policy committees
communication
judgment aggregation
discursive dilemma
JEL: 
E52
E58
D71
Persistent Identifier of the first edition: 
ISBN: 
978-82-7553-724-7
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper
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