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A social discount rate for Italy

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  • Marco Percoco

Abstract

Because of the budgetary constraints imposed by the Stability and Growth Pact, the need for cost and benefit evaluation of public investment has become increasingly relevant. In a cost-benefit analysis framework, the definition of the social discount rate is key to the selection of projects and programmes on the basis of their socio-economic return. To this extent, the Italian Ministry of the Economy has passively adopted the 5% rate proposed by the European Commission to evaluate projects financed by Structural Funds. In this article, we estimate a social discount rate for Italy, finding that a 3.7-3.8 rate would be appropriate, thus 1.2-1.3% lower than the official one.

Suggested Citation

  • Marco Percoco, 2007. "A social discount rate for Italy," Applied Economics Letters, Taylor & Francis Journals, vol. 15(1), pages 73-77.
    • Handle: RePEc:taf:apeclt:v:15:y:2007:i:1:p:73-77
    DOI: 10.1080/13504850600706537
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    1. David Pearce, 1999. "Economics and Environment," Books, Edward Elgar Publishing, number 354.
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    1. Ferda Halicioglu & Cevat Karatas, 2013. "A social discount rate for Turkey," Quality & Quantity: International Journal of Methodology, Springer, vol. 47(2), pages 1085-1091, February.
    2. David J. EVANS, 2006. "Social discount rates for the European Union," Departmental Working Papers 2006-20, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    3. Jan Kubíček & Leoš Vítek, 2010. "Hodnocení veřejných projektů z hlediska společenské míry diskontace [Evaluation of Public Projects from the Viewpoint of Social Rate of Discount]," Politická ekonomie, Prague University of Economics and Business, vol. 2010(3), pages 291-304.
    4. Ferda Halicioglu & Cevat Karatas, 2011. "Estimation of Economic Discounting Rate for Practical Project Appraisal: The Case of Turkey," Journal of Developing Areas, Tennessee State University, College of Business, vol. 45(1), pages 155-166, July-Dece.
    5. Massimo Florio & Emanuela Sirtori, 2013. "The social cost of capital: recent estimates for the EU countries," Working Papers 201303, CSIL Centre for Industrial Studies.

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