Discounting the distant future: How much does model selection affect the certainty equivalent rate?

Groom, Ben, Koundouri, Phoebe, Panopoulou, Ekaterini, Pantelidis, Theologos (2007) Discounting the distant future: How much does model selection affect the certainty equivalent rate? Journal of Applied Econometrics, 22 (3). pp. 641-656. ISSN 0883-7252. (doi:10.1002/jae.937) (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided) (KAR id:34291)

The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided.
Official URL: http://dx.doi.org/10.1002/jae.937

Abstract

Recent work in evaluating investments with long-term consequences has turned towards establishing a schedule of Declining Discount Rates (DDRs). Using US data we show that the employment of models that account for changes in the interest rate generating mechanism has important implications for operationalising a theory of DDRs that depends upon uncertainty. The policy implications of DDRs are then analysed in the context of climate change for the USA, where the use of a state space model can increase valuations by 150% compared to conventional constant discounting.

Item Type:	Article
DOI/Identification number:	10.1002/jae.937
Subjects:	H Social Sciences H Social Sciences > H Social Sciences (General)
Divisions:	Divisions > Kent Business School - Division > Kent Business School (do not use)
Depositing User:	Catherine Norman
Date Deposited:	13 Jun 2013 15:25 UTC
Last Modified:	05 Nov 2024 10:17 UTC
Resource URI:	https://kar.kent.ac.uk/id/eprint/34291 (The current URI for this page, for reference purposes)

University of Kent Author Information

Panopoulou, Ekaterini.

Creator's ORCID:	https://orcid.org/0000-0001-5080-9965
CReDIT Contributor Roles:

Pantelidis, Theologos.

Creator's ORCID:
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