MARC Record from Library of Congress

LEADER: 02061nam a22002777a 4500
001 2009655839
003 DLC
005 20091229120710.0
007 cr |||||||||||
008 091229s2009 mau sb 000 0 eng
010 $a 2009655839
040 $aDLC$cDLC
050 00 $aHB1
100 1 $aWeitzman, Martin L.,$d1942-
245 10 $aRisk-adjusted gamma discounting$h[electronic resource] /$cMartin L. Weitzman.
260 $aCambridge, MA :$bNational Bureau of Economic Research,$cc2009.
490 1 $aNBER working paper series ;$vworking paper 15588
538 $aSystem requirements: Adobe Acrobat Reader.
538 $aMode of access: World Wide Web.
500 $aTitle from PDF file as viewed on 12/29/2009.
530 $aAlso available in print.
504 $aIncludes bibliographical references.
520 3 $a"It is widely recognized that the economics of distant-future events, like climate change, is critically dependent upon the choice of a discount rate. Unfortunately, it is unclear how to discount distant-future events when the future discount rate itself is unknown. In previous work, an analytically-tractable approach called "gamma discounting" was proposed, which gave a declining discount rate schedule as a simple closed-form function of time. This paper extends the previous gamma approach by using a Ramsey optimal growth model, combined with uncertainty about future productivity, in order to "risk adjust" all probabilities by marginal utility weights. Some basic numerical examples are given, which suggest that the overall effect of risk-adjusted gamma discounting on lowering distant-future discount rates may be significant. The driving force is a "fear factor" from risk aversion to permanent productivity shocks representing catastrophic future states of the world"--National Bureau of Economic Research web site.
710 2 $aNational Bureau of Economic Research.
830 0 $aWorking paper series (National Bureau of Economic Research : Online) ;$vworking paper no. 15588.
856 40 $uhttp://www.nber.org/papers/w15588