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The Discount Rate for Public Policy over the Distant Future

Li, Qingran - 2018

The choice of discount rate has a significant impact on net benefit estimates when costs today have benefits over long time horizons. Standard U.S. government practice for cost-benefit analysis is to bound such analysis using two alternative rates. These rates are meant to represent the rate of...

Persistent link: https://www.econbiz.de/10012481060

Myopia and Discounting

Gabaix, Xavier - 2017

and combining those signals with priors to form posteriors. These posterior expectations exhibit as-if discounting: agents … forecasting (e.g., those with more intelligence) exhibit less discounting. Agents with more domain-relevant experience exhibit … less discounting. Older agents exhibit less discounting (except those with cognitive decline). Agents who are encouraged to …

Persistent link: https://www.econbiz.de/10012455427

The Discounted Euler Equation : A Note

McKay, Alisdair - 2016

We present a simple model with income risk and borrowing constraints which yields a "discounted Euler equation." This feature of the model mutes the extent to which news about far future real interest rates (i.e., forward guidance) affects current outcomes. We show that this simple model...

Persistent link: https://www.econbiz.de/10012456545

Excess Volatility : Beyond Discount Rates

Giglio, Stefano - 2016

We document a form of excess volatility that is irreconcilable with standard models of prices, even after accounting for variation in discount rates. We compare prices of claims on the same cash flow stream but with different maturities. Standard models impose precise internal consistency...

Persistent link: https://www.econbiz.de/10012456629

The Choice of Discount Rate for Climate Change Policy Evaluation

Goulder, Lawrence H. - 2012

Distinguishing the two rates helps resolve arguments as to whether the choice of discount rate should be based on ethical considerations or empirical information (such as market interest rates), and about whether the discount rate should serve a prescriptive or descriptive role. Separating out...

Persistent link: https://www.econbiz.de/10012460360

Discount Rates

Cochrane, John H. - 2011

, including portfolio theory, accounting, cost of capital, capital structure, compensation, and macroeconomics …

Persistent link: https://www.econbiz.de/10012461685

Very Long-Run Discount Rates

Giglio, Stefano - 2014

We provide direct estimates of how agents trade off immediate costs and uncertain future benefits that occur in the very long run, 100 or more years away. We exploit a unique feature of housing markets in the U.K. and Singapore, where residential property ownership takes the form of either...

Persistent link: https://www.econbiz.de/10012458531

Social Security Money's Worth

Geanakoplos, John - 2000

This paper describes how three money's worth measures the benefit-to-tax ratio, the internal rate of return, and the net present value are calculated and used in analyses of social security reforms, including systems with privately managed individual accounts invested in equities. Declining...

Persistent link: https://www.econbiz.de/10012471081

Country Risk, Foreign Borrowing and the Social Discount Rate in an Open Developing Economy

Edwards, Sebastian - 1985

Most discussions on the social rate of discount have assumed that the economy under consideration is isolated from the rest of the world, and that there are no capital movements. This paper explicitly analyzes the determination of the social rate of discount in a small open developing economy....

Persistent link: https://www.econbiz.de/10012477429

Tax Neutrality and the Social Discount Rate : A Suggested Framework

Auerbach, Alan J. - 1980

There is probably no specific problem in tax analysis which has generated as much study and discussion among economists as the question of how to formulate "neutral" tax incentives for investment. Yet no consensus has been reached concerning the proper approach to take when adjusting taxes....

Persistent link: https://www.econbiz.de/10012478688

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