Characterizing the amount and speed of discounting procedures
AbstractThis paper introduces the concept of categorizing the amount and speed of a discounting procedure in order to generate well-characterized families of procedures for use in social project evaluation. Exponential discounting isolates the concepts of amount and speed into a single parameter that must be disaggregated in order to characterize nonconstant rate procedures. The inverse of the present value of a unit stream of benefits provides a natural measure of the amount a procedure discounts the future. We propose geometrical- and time horizon-based measures of how rapidly a procedure acquires its ultimate present value, and we prove these values are the same.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Boston in its series Working Papers with number 10-14.
Date of creation: 2010
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-02-05 (All new papers)
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