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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/26402
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| Title: | | Discounting the long-distant future: a simple explanation for the Weitzman-Gollier-puzzle  |
| Authors: | | Buchholz, Wolfgang Schumacher, Jan |
| Issue Date: | | 2008 |
| Series/Report no.: | | CESifo working paper 2357 |
| Abstract: | | In this paper, we reconsider the debate on Weitzman's (1998) suggestion to discount the long-run future at the lowest possible rate, referring to Gollier (2004) and Hepburn & Groom (2007). We show that, while Weitzman's use of the present value approach may indeed seem questionable, its outcome, i.e. a discount rate that is declining over time, is nevertheless reasonable, since it can be justified by assuming a plausible degree of risk aversion. |
| Subjects: | | Discount rates uncertainty risk aversion |
| JEL: | | D40 E43 Q51 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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