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Should We Discount the Far-Distant Future at Its Lowest Possible Rate?

Gollier, Christian - Institut für Weltwirtschaft (IfW) - 2009

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...

Persistent link: https://www.econbiz.de/10005083338

Yes, we should discount the far-distant future at its lowest possible rate: a resolution of the Weitzman-Gollier puzzle

Freeman, Mark C. - Institut für Weltwirtschaft (IfW) - 2009

In this paper the author proves that the Expected Net Future Value (ENFV) criterion can lead a risk neutral social planner to reject projects that increase expected utility. By contrast, the Expected Net Present Value (ENPV) rule correctly identifies the economic value of the project. While the...

Persistent link: https://www.econbiz.de/10008561126

Consumption Volatility and Financial Openness

Buch, Claudia M.; Yener, Serkan - Institut für Weltwirtschaft (IfW) - 2005

Economic theory predicts that the integration of financial markets lowers the volatility of consumption. In this paper …, we study long-term trends in the consumption volatility of the G7 countries. Using different measures of financial … openness, we find that greater financial openness has been associated with lower consumption volatility in Canada and Italy. In …

Persistent link: https://www.econbiz.de/10010886887

Debt and Interest Rates: The U.S. and the Euro Area

Frankel, Jeffrey; Chinn, Menzie D. - Institut für Weltwirtschaft (IfW) - 2007

We find that real interest rates paid on government debt depend significantly upon current and expected future levels of debt, in Europe as in the US. But this result only emerges when we condition on foreign interest rates, illustrating financial international integration. The previously strong...

Persistent link: https://www.econbiz.de/10005083400

Business Cycle Fluctuations and International Financial Integration

Kizys, Renatas; Pierdzioch, Christian - Institut für Weltwirtschaft (IfW) - 2004

Theoretical research on the determinants of business-cycle fluctuations implies that the degree of international financial integration can have important implications for the propagation of, e.g., macroeconomic policy shocks in an open economy. An important assumption underlying this research is...

Persistent link: https://www.econbiz.de/10005755263

Real Financial Market Exchange Rates and Capital Flows

Gelman, Maria; Jochem, Axel; Reitz, Stefan; Taylor, Mark P. - Institut für Weltwirtschaft (IfW) - 2014

Foreign exchange rates, asset prices and capital movements are expected to be closely related to each other as international capital markets become more and more integrated. This paper provides new empirical evidence from an index of exchange-rate adjusted cross-country asset price ratios, which...

Persistent link: https://www.econbiz.de/10010886943

Sentiment indices on financial markets: What do they measure?

Bormann, Sven-Kristjan - Institut für Weltwirtschaft (IfW) - 2013

Sentiment indices based on investor sentiment surveys attempt to measure the stock market sentiment. The literature on these indices focusses mainly on whether investor sentiment influences the financial markets or not. But the term 'sentiment' has never been defined in the literature. Therefore...

Persistent link: https://www.econbiz.de/10010956116

Modelling bank asset quality and profitability: An empirical assessment

Swamy, Vighneswara - Institut für Weltwirtschaft (IfW) - 2015

The determinants of default risk of banks in emerging economies have so far received inadequate attention in the literature. This paper seeks to study the determinants of bank asset quality and profitability using panel data techniques and robust data sets for the period between 1997 and 2009....

Persistent link: https://www.econbiz.de/10011263002

Evolvement of uniformity and volatility in the stressed global financial village

Kenett, Dror Y.; Raddant, Matthias; Lux, Thomas; … - Institut für Weltwirtschaft (IfW) - 2011

quantify inter-market relations. The approach is based on the correlations between the market index, the index volatility, the …

Persistent link: https://www.econbiz.de/10009358672

Financial Market Integration and Business Cycle Volatility in a Monetary Union

Pierdzioch, Christian - Institut für Weltwirtschaft (IfW) - 2002

implies that business cycle volatility is higher the more integrated the capital markets of the member countries of the …

Persistent link: https://www.econbiz.de/10005755191