Numerical Analysis of Non-Constant Discounting with an Application to Renewable Resource Management
AbstractThe possibility of non-constant discounting is important in environmental and resource management problems where current decisions affect welfare in the far-distant future, as with climate change. The difficulty of analyzing models with non-constant discounting limits their application. We describe and provide software to implement an algorithm to numerically obtain a Markov Perfect Equilibrium for an optimal control problem with non-constant discounting. The software is available online. We illustrate the approach by studying welfare and observational equivalence for a particular renewable resource management problem.
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Bibliographic InfoPaper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt74q473v8.
Date of creation: 31 May 2006
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Non-constant discounting; numerical methods; non-renewable resources; observational equivalence.; Social and Behavioral Sciences;
Other versions of this item:
- Fujii, Tomoki & Karp, Larry, 2006. "Numerical analysis of non-constant discounting with an application to renewable resource management," CUDARE Working Paper Series 1019, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
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