There is still much confusion about which discount rates should be used to evaluate actions having long-lasting impacts, as in the contexts of climate change, social security reforms or large public infrastructures for example. Contrary to the existing literature that focuses on the discount rate for safe projects, this paper characterizes the term structure of discount rates for investment pro...

The combination of either boceprevir or telaprevir with ribavirin and interferon (triple therapy) has been shown to be more effective than ribavirin+interferon (dual therapy) for the treatment of genotype 1 hepatitis C. Since the benefit of these treatments takes place after years, simulation models are needed to predict long-term outcomes. In simulation models, the choice of different values o...

The research and development costs of 106 randomly selected new drugs were obtained from a survey of 10 pharmaceutical firms. These data were used to estimate the average pre-tax cost of new drug and biologics development. The costs of compounds abandoned during testing were linked to the costs of compounds that obtained marketing approval. The estimated average out-of-pocket cost per approved ...

Subjective Discount Rates, Intergenerational Transfers and the Return to Schooling Using a dynamic programming model of schooling decisions, we investigate the relationship between subjective discount rates and the labor market ability (the discount rate bias) on a panel taken from the National Longitudinal Survey of Youth (NLSY). Given household human capital and Armed Forces Qualification tes...

The optimal investment to mitigate climate change crucially depends on the discount rate used to evaluate the investment’s uncertain future benefits. The appropriate discount rate is a function of the horizon over which these benefits accrue and the riskiness of the investment. In this paper, we estimate the term structure of discount rates for an important risky asset class, real estate, up to...

Heterogeneity in the Production of Human Capital We derive a tractable nonlinear earnings function which we estimate separately for each individual in the NLSY79 data. These estimates yield five important parameters for each individual: three ability measures (two representing the ability to learn and one the ability to earn), a rate of skill depreciation, and a time discount rate. In addition,...

this paper presents a theoretical model in order to determine tile expected rate of durable good`s supply over time. the social plaliner maximizes tile sum of the discount ed net benefit. subject to the stochastic fluctuation in the stock of durable goods. it turns out that a social planner increases the expected rate of supply since uncertainty increases the user's loss from the view poin...

Uncertain, yet persistent, real rates of return to capital underpin one argument for using a declining schedule of social discount rates. Yet persistency is only present in approximately the …rst three-quarters of the time-series of US Treasury bond yields used by Newell and Pizer [37] to estimate the term structure for the US Environmental Protection Agency. This coincides with the period in w...

Banks must measure the loss arising from counterparty default in order to achieve Advanced Internal Ratings-Based (IRB) compliance under the proposed Basel II minimum regulatory capital framework. The discount rate to be used on cash received post-default is not agreed upon amongst practitioners and banking supervisors. We review alternative extant proposals and develop a framework for choosing...

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expresse...