Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/27488 
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dc.contributor.authorGollier, Christianen
dc.date.accessioned2009-08-12T07:15:04Z-
dc.date.available2009-08-12T07:15:04Z-
dc.date.issued2009-
dc.identifier.urihttp://hdl.handle.net/10419/27488-
dc.description.abstractIn 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
dc.language.isoengen
dc.publisher|aKiel Institute for the World Economy (IfW) |cKielen
dc.relation.ispartofseries|aEconomics Discussion Papers |x2009-7en
dc.subject.jelE43en
dc.subject.jelQ51en
dc.subject.jelG12en
dc.subject.ddc330en
dc.subject.keywordDiscount rateen
dc.subject.keywordterm structureen
dc.subject.keywordcertainty equivalent rateen
dc.subject.keywordRamsey ruleen
dc.subject.keywordsustainable developmenten
dc.subject.stwSoziale Diskontrateen
dc.subject.stwZinsstrukturen
dc.subject.stwOptimales Wachstumen
dc.subject.stwNachhaltige Entwicklungen
dc.subject.stwTheorieen
dc.titleShould We Discount the Far-Distant Future at Its Lowest Possible Rate?-
dc.typeWorking Paperen
dc.identifier.ppn589828975en
dc.rights.licensehttp://creativecommons.org/licenses/by-nc/2.0/de/deed.enen
dc.identifier.repecRePEc:zbw:ifwedp:7486en

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