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Discounting the Long-Distant Future: A Simple Explanation for the Weitzman-Gollier-Puzzle

Buchholz, Wolfgang and Schumacher, Jan (2008) Discounting the Long-Distant Future: A Simple Explanation for the Weitzman-Gollier-Puzzle. CESifo Working Paper Series 2357, Working Paper.

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Other URL: http://www.cesifo.de/DocCIDL/cesifo1_wp2357.pdf


In this paper, we reconsider the debate on Weitzman's (1998) suggestion to discount the longrun future at the lowest possible rate, referring to Gollier (2004) and Hepburn & Groom
(2007). We show that, while Weitzman's use of the present value approach may indeed seem questionable, its outcome, i.e. a discount rate that is declining over time, is nevertheless reasonable, since it can be justified by assuming a plausible degree of risk aversion.

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Item type:Monograph (Working Paper)
Date:July 2008
Institutions:Business, Economics and Information Systems > Institut für Volkswirtschaftslehre und Ökonometrie > Lehrstuhl für Finanzwissenschaft, insbesondere Umweltökonomie (Prof. Dr. Wolfgang Buchholz)
D40Journal of Economics Literature Classification
E43Journal of Economics Literature Classification
Q51Journal of Economics Literature Classification
Keywords:discount rates, uncertainty, risk aversion
Dewey Decimal Classification:300 Social sciences > 330 Economics
Refereed:No, this document will not be refereed
Created at the University of Regensburg:Yes
Item ID:9616
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