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Declining Discount Rates: Evidence from the UK

Author

Listed:
  • Groom, Ben
  • Koundouri, Phoebe
  • Panopoulou, Ekaterini
  • Pantelidis, Theologos

Abstract

We estimate schedules of declining discount rates for cost benefit analysis in the UK. We highlight the importance of model selection for this task and hence for the evaluation of long-term investments, namely climate change prevention and nuclear build.

Suggested Citation

  • Groom, Ben & Koundouri, Phoebe & Panopoulou, Ekaterini & Pantelidis, Theologos, 2005. "Declining Discount Rates: Evidence from the UK," MPRA Paper 122402, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:122402
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    File URL: https://mpra.ub.uni-muenchen.de/122402/1/MPRA_paper_122402.pdf
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    References listed on IDEAS

    as
    1. David Pearce & Ben Groom & Cameron Hepburn & Phoebe Koundouri, 2003. "Valuing the Future: Recent advances in social discounting," DEOS Working Papers 0308, Athens University of Economics and Business.
    2. Gollier, Christian, 2002. "Time Horizon and the Discount Rate," Journal of Economic Theory, Elsevier, vol. 107(2), pages 463-473, December.
    3. Newell, Richard G. & Pizer, William A., 2003. "Discounting the distant future: how much do uncertain rates increase valuations?," Journal of Environmental Economics and Management, Elsevier, vol. 46(1), pages 52-71, July.
    4. Gollier, Christian, 2002. "Discounting an uncertain future," Journal of Public Economics, Elsevier, vol. 85(2), pages 149-166, August.
    5. Weitzman, Martin L., 1998. "Why the Far-Distant Future Should Be Discounted at Its Lowest Possible Rate," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 201-208, November.
    6. David Pearce & Ben Groom & Cameron Hepburn & Phoebe Koundouri, 2003. "Valuing the Future," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 4(2), pages 121-141, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    long-run discounting; state-space models; regime-switching models; climate change policy; nuclear build;
    All these keywords.

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • Y10 - Miscellaneous Categories - - Data: Tables and Charts - - - Data: Tables and Charts

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