Discounting and Growth

S-Tier
Journal: American Economic Review
Year: 2014
Volume: 104
Issue: 5
Pages: 534-37

Score contribution per author:

8.043 = (α=2.01 / 1 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

In a growing economy, the discount rate to evaluate a long-term investment is the minimum rate of expected return that compensates for the increased intergenerational inequalities. Because the growth rate is uncertain, there is a precautionary argument in favor of lowering the discount rate. If shocks to growth are persistent, this is a robust argument for using a smaller discount rate for more distant time horizons. If climate damages are positively correlated with future consumption, a risk premium should be added to the climate discount rate, which could have an increasing term structure.

Technical Details

RePEc Handle
repec:aea:aecrev:v:104:y:2014:i:5:p:534-37
Journal Field
General
Author Count
1
Added to Database
2026-01-25