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Characterizing the amount and speed of discounting procedures

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  • Dean T. Jamison
  • Julian Jamison

Abstract

This paper introduces the concept of categorizing the amount and speed of a discounting procedure in order to generate well-characterized families of procedures for use in social project evaluation. Exponential discounting isolates the concepts of amount and speed into a single parameter that must be disaggregated in order to characterize nonconstant rate procedures. The inverse of the present value of a unit stream of benefits provides a natural measure of the amount a procedure discounts the future. We propose geometrical- and time horizon-based measures of how rapidly a procedure acquires its ultimate present value, and we prove these values are the same.

Suggested Citation

  • Dean T. Jamison & Julian Jamison, 2010. "Characterizing the amount and speed of discounting procedures," Working Papers 10-14, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbwp:10-14
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    Keywords

    Production (Economic theory); Discount;

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