Yes, We Should Discount the Far-Distant Future at Its Lowest Possible Rate: A Resolution of the Weitzman–Gollier Puzzle
Abstract: In this paper the author proves that the Expected Net Future Value (ENFV) criterion can lead a risk neutral social planner to reject projects that increase expected utility. By contrast, the Expected Net Present Value (ENPV) rule correctly identifies the economic value of the project. While the ENFV increases with uncertainty over future interest rates, the expected utility decreases because of the planner’s desire to smooth consumption across time. This paper therefore shows that Weitzman (1998) is “right” and that, within his economy, the far-distant future should be discounted at its lowest possible rate.
- Location
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Deutsche Nationalbibliothek Frankfurt am Main
- Extent
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Online-Ressource
- Language
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Englisch
- Bibliographic citation
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Yes, We Should Discount the Far-Distant Future at Its Lowest Possible Rate: A Resolution of the Weitzman–Gollier Puzzle ; volume:4 ; number:1 ; year:2010 ; extent:22
Economics / Journal articles. Journal articles ; 4, Heft 1 (2010) (gesamt 22)
- Creator
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Freeman, Mark C.
- DOI
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10.5018/economics-ejournal.ja.2010-13
- URN
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urn:nbn:de:101:1-2412130921139.205241278088
- Rights
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Open Access; Der Zugriff auf das Objekt ist unbeschränkt möglich.
- Last update
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15.08.2025, 7:37 AM CEST
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Associated
- Freeman, Mark C.
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