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Institut für Weltwirtschaft (IfW), Kiel >
Economics: The Open-Access, Open-Assessment E-Journal - Discussion Papers >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/27488
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Full metadata record
| DC Field | | Value | | Language |
| dc.contributor.author | | Gollier, Christian | | en_US |
| dc.date.accessioned | | 2009-08-12T07:15:04Z | | - |
| dc.date.available | | 2009-08-12T07:15:04Z | | - |
| dc.date.issued | | 2009 | | en_US |
| dc.identifier.uri | | http://hdl.handle.net/10419/27488 | | - |
| dc.description.abstract | | In this paper, we elaborate on an idea initially developed by Weitzman (1998) that justifies taking the lowest possible discount rate for far-distant future cash flows. His argument relies on the arbitrary assumption that when the future rate of return of capital (RRC) is uncertain, one should invest in any project with a positive expected net present value. We examine an economy with a risk-averse representative agent facing an uncertain evolution of the RRC. In this context, we characterize the socially efficient stochastic consumption path, which allows us in turn to use the Ramsey rule to characterize the term structure of socially efficient discount rates. We show that Weitzman's claim is qualitatively correct if shocks on the RRC are persistent. On the contrary, in the absence of any serial correlation in the RRC, the term structure of discount rates should be flat. | | en_US |
| dc.language.iso | | eng | | en_US |
| dc.publisher | | Kiel Institute for the World Economy (IfW) Kiel | | - |
| dc.relation.ispartofseries | | Economics Discussion Papers / Institut für Weltwirtschaft 2009-7 | | en_US |
| dc.subject.jel | | E43 | | en_US |
| dc.subject.jel | | Q51 | | en_US |
| dc.subject.jel | | G12 | | en_US |
| dc.subject.ddc | | 330 | | en_US |
| dc.subject.keyword | | Discount rate | | en_US |
| dc.subject.keyword | | term structure | | en_US |
| dc.subject.keyword | | certainty equivalent rate | | en_US |
| dc.subject.keyword | | Ramsey rule | | en_US |
| dc.subject.keyword | | sustainable development | | en_US |
| dc.subject.stw | | Soziale Diskontrate | | en_US |
| dc.subject.stw | | Zinsstruktur | | en_US |
| dc.subject.stw | | Optimales Wachstum | | en_US |
| dc.subject.stw | | Nachhaltige Entwicklung | | en_US |
| dc.subject.stw | | Theorie | | en_US |
| dc.title | | Should We Discount the Far-Distant Future at Its Lowest Possible Rate? | | en_US |
| dc.type | | Working Paper | | en_US |
| dc.identifier.ppn | | 589828975 | | en_US |
| dc.rights.license | | http://creativecommons.org/licenses/by-nc/2.0/de/deed.en | | - |
| dc.identifier.repec | | RePEc:zbw:ifwedp:7486 | | - |
| Appears in Collections: | | Economics: The Open-Access, Open-Assessment E-Journal - Discussion Papers
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