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Declining discount rates

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journal contribution
posted on 12.02.2015, 11:31 by Maureen L. Cropper, Mark Freeman, Ben Groom, William A. Pizer
We ask whether the US government should replace its current discounting practices with a declining discount rate schedule, as the United Kingdom and France have done, or continue to discount the future at a constant exponential rate. We present the theoretical basis for a declining discount rate (DDR) schedule, but focus on how, in practice, a DDR could be estimated for use by policy analysts. We discuss the empirical approaches in the literature and review how the United Kingdom and France estimated their DDR schedules. We conclude with advice on how the United States might proceed to consider modifying its current discounting practices.

History

School

  • Business and Economics

Department

  • Business

Published in

American Economic review

Volume

104

Issue

5

Pages

538 - 543

Citation

CROPPER, M.L. ... et al., 2014. Declining discount rates. American Economic Review, 104 (5), pp. 538 - 543.

Publisher

© American Economic Association

Version

AM (Accepted Manuscript)

Publisher statement

This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/

Publication date

2014-05-31

Notes

This article was published in the American Economic Review [© American Economic Association] and the definitive version is available at: http://dx.doi.org/10.1257/aer.104.5.538

ISSN

0002-8282

Language

en

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Keywords

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