In the economics of climate change, the future benefits of greenhouse gas emissions abatement are commonly discounted at a rate equal to the long-run return on corporate stocks, which averaged 6% per year during the 20 century. Since a 6% discount rate implies that one dollar of benefits obtained one century from the present attains a present value of less than one cent, this method implies tha...

In this study, the effect of a temporary price discount for a larger order than the regular order offered by the supplier on the retailer’s ordering policy is studied. The demand is assumed to be stock-dependent. The units in inventory deteriorate at a constant rate. This study will help the retailer to take the decision whether to adopt a regular or special order policy. The optimum special qu...

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...

It is well-known that the discount rate is crucially important for estimating the social cost of carbon, a standard indicator for the seriousness of climate change and desirable level of climate policy. The Ramsey equation for the discount rate has three components: the pure rate of time preference, a measure of relative risk aversion, and the rate of growth of per capita consumption. Much of t...

Following the Stern review of climate change the numerical choice of the social discount rate has been identified as one of the most crucial determinants of optimal policy recommendations for greenhouse gas mitigation policies. In this paper I point out two closely related contributions to the social discount rate in an uncertain world that have been overlooked in the debate. First, the standar...

This study investigates whether discount rate changes serve as an informative signal for investors to enter or exit the stock market. Based on the signal, a market timing strategy is formulated and its performance relative to a passive buy-and-hold strategy is tested with several performance evaluation methods. Empirical evidence derived from data of seven developed countries over more than 29 ...

We examine the problem of selecting the discount rate for far distant cash-flows when there is much uncertainty about what will be the future investment opportunities in the economy. We show that it is efficient to take a discount rate that is increasing with the time horizon, and that this rate should tend to the largest possible rate as the horizon tends to infinity. These recommendations are...

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...

In September 2011, the US Environmental Protection Agency asked 12 economists how the benefits and costs of regulations should be discounted for projects that affect future generations. This paper summarizes the views of the panel on three topics: the use of the Ramsey formula as an organizing principle for determining discount rates over long horizons, whether the discount rate should decline ...