Research | The Ramsey discounting formula for a hidden-state stochastic growth process
The Ramsey discounting formula for a hidden-state stochastic growth process

The Ramsey discounting formula for a hidden-state stochastic growth process

7 June 2012

The paper highlights how the choice of an appropriate discount rate is a critical issue in economics, and arguably more so for projects involving long time horizons. In particular, environmental projects and activities whose effects will be felt in the future pose significant challenges. The paper models such challenges as an evolving hidden-state stochastic process.

 

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