The Discount Rate in Long-Term Investment Projects

Authors

Keywords:

discount rate, gamma discounting, long-term projects, project evaluation, environmental economics

Abstract

This paper estimates the rate of discount to be used in Chile when evaluating long run projects with environmental consequences. The methodology is known as Gamma Discounting and was presented first by Martin Weitzman in the American Economic Review in March 2001.

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References

Azqueta, D. (1994). Valoración económica de la calidad ambiental. McGraw Hill.

Barro, R. J., & Sala-I-Martin, X. (1995). Economic growth. McGraw-Hill, Inc.

Cropper, M. L., & Laibson, D. (1999). The implications of hyperbolic discounting for project evaluation. en Paul R. Portney y John P. Weyant (eds.), Discounting and Intergenerational Equity. Washington, DC: Resources for the Future, 163–72.

Dasgupta, P. (2001). Human well being and the natural environment. Oxford University Press.

Edwards, G. (2002). The effect of choosing between a constant or a declining discount rate on optimal investment timing. Documento de Trabajo Nº 227. Instituto de Economía, Pontificia Universidad Católica de Chile.

Nordhaus, W. D. (1999). Discounting and public policies that affect the distant future. en P. R. Portney y J. P. Weyant (eds.), Discounting and Intergenerational Equity. Resources for the Future.

Turner, R. K., Pearce, D., & Bateman, I. (1993). Environmental economics: An elementary introduction. The Johns Hopkins University Press.

Turnovsky, S. (2000). Methods of macroeconomic dynamics. MIT Press, segunda edición.

Weitzman, M. L. (2001). Gamma discounting. American Economic Review, 91(1), 260–71.

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Published

2002-10-31

How to Cite

Edwards, G. (2002). The Discount Rate in Long-Term Investment Projects. Economic Analysis Review, 17(2), 123–141. Retrieved from https://www.rae-ear.org/index.php/rae/article/view/21

Issue

Vol. 17 No. 2 (2002)

Section

Articles

License

Copyright (c) 2002 Gonzalo Edwards

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

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