Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282377 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10689
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
The appraisal of public investments is subject to formal guidelines which often require input prices, such as forecasted energy prices. Using Danish guidelines as a case study, we explore the discounting assumptions in these input prices and find rates ranging from 2.97% to 17.5%, markedly different from the headline discount rate of 3.5%. This is not unique to Denmark and discrepancy in embedded discount rates can lead to false rejection of projects. We offer three possible explanations for such differences, based on positions on how the discount rate should be set.
Subjects: 
discounting
social discount rate
cost-benefit analysis
public guidelines
JEL: 
D61
H43
L51
Q48
Document Type: 
Working Paper
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