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dc.contributor.authorGollier, Christianen_US
dc.description.abstractWeitzman (1998) showed that when future interest rates are uncertain, using the expected net present value implies a term structure of discount rates that is decreasing to the smallest possible interest rate. On the contrary, using the expected net future value criterion implies an increasing term structure of discount rates up to the largest possible interest rate. We reconcile the two approaches by introducing risk aversion and risk-neutral probabilities. We show that if the aggregate consumption path is optimized, the two criteria are equivalent. Moreover, they are also equivalent to the Ramsey rule extended to uncertainty.en_US
dc.publisherCenter for Economic Studies and Ifo Institute (CESifo) Munichen_US
dc.relation.ispartofseriesCESifo working paper 2643en_US
dc.subject.keyworddiscount rateen_US
dc.subject.keywordasset priceen_US
dc.subject.keywordRamsey ruleen_US
dc.subject.keywordcost-benefit analysisen_US
dc.subject.stwDynamische Investitionsrechnungen_US
dc.subject.stwOptimale Besteuerungen_US
dc.titleExpected net present value, expected net future value, and the Ramsey ruleen_US
dc.typeWorking Paperen_US
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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