How to aggregate experts' discount rates: An equilibrium approach

Napp, Clotilde; Jouini, Elyès

Napp, Clotilde; Jouini, Elyès (2014), How to aggregate experts' discount rates: An equilibrium approach, Economic Modelling, 36, p. 235–243. http://dx.doi.org/10.1016/j.econmod.2013.09.052

Type

Article accepté pour publication ou publié

External document link

http://halshs.archives-ouvertes.fr/halshs-00394035/en/

Date

2014

Journal name

Economic Modelling

Volume

Publisher

Elsevier

Pages

235–243

Abstract (EN)

We address the problem of a social planner who, as in Weitzman, (2001), gathers data on experts' discount rates and wants to infer the social consumption discount rate. We propose an equilibrium approach and we analyze the expression and the properties of the resulting equilibrium discount rate. We analyze the impact of shifts in the distribution of experts' discount rates on the shape of the yield curve. Finally, we apply our approach to Weitzman's (2001) data to propose discount rates for public sector cost–benefit analysis, in particular for the long term.

Subjects / Keywords

Divergence of opinion; Gamma discounting; Cost–benefit analysis; Hyperbolic discounting; Experts discount rate; Equilibrium discount rate; Consumption discount rate

JEL

E43 - Interest Rates: Determination, Term Structure, and Effects
D61 - Allocative Efficiency; Cost–Benefit Analysis