Yes, we should discount the far-distant future at its lowest possible rate: a resolution of the Weitzman-Gollier puzzle

Article, Research, Preprint English OPEN
Freeman, Mark C.;
(2009)
  • Publisher: Kiel: Kiel Institute for the World Economy (IfW)
  • Journal: volume 4,pages1-21
  • Related identifiers: doi: 10.5018/economics-ejournal.ja.2010-13
  • Subject: Zinsrisiko | G31 | E43 | environmental planning | term structure | Discount rates,term structure,capital budgeting,interest rate uncertainty,environmental planning | G12 | interest rate uncertainty | Q51 | Investitionsrechnung | Umweltplanung | Discount rates | Zinsstruktur | Soziale Diskontrate | capital budgeting | D61 | Theorie
    • jel: jel:E43 | jel:G12 | jel:G31 | jel:D61 | jel:Q51
      ddc: ddc:330

In this paper the author proves that the Expected Net Future Value (ENFV) criterion can lead a risk neutral social planner to reject projects that increase expected utility. By contrast, the Expected Net Present Value (ENPV) rule correctly identifies the economic value ... View more
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