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Calculating the Social Opportunity Cost Discount Rate

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Author Info

  • Burgess David F.

    (University of Western Ontario)

  • Zerbe Richard O

    (University of Washington, Seattle)

Abstract

Two comments in this issue of the Journal address our recent article in Volume 2, Issue 2. The fundamental issue with both comments is that they confuse the financial rate of return with the opportunity cost rate of return and therefore advocate for an inappropriate basis on which to calculate the government discount rate. That is, both comments confuse the financial cost of funds, or the borrowing rate, with the economic opportunity cost of funds. We hope that this exchange advances the subject by reducing confusion.

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Bibliographic Info

Article provided by De Gruyter in its journal Journal of Benefit-Cost Analysis.

Volume (Year): 2 (2011)
Issue (Month): 3 (August)
Pages: 1-10

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Handle: RePEc:bpj:jbcacn:v:2:y:2011:i:3:n:8

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Blog mentions

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  1. Development that Works: In the long run we are all dead
    by Francisco Mejía in Eval Central on 2013-05-31 16:02:30
  2. En el largo plazo todos estamos muertos
    by Francisco Mejía in Hacia el desarrollo efectivo on 2013-05-31 17:24:55

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