The Effect of a Constant or a Declining Discount Rate on Optimal Investment Timing
AbstractThis paper shows that exponential discounting may have anadvancing effect on the timing of investment, not captured bysensitivity analysis carried out for the complete range of instantaneous discount rates implicit in declining discounting.
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Bibliographic InfoPaper provided by Instituto de Economia. Pontificia Universidad Católica de Chile. in its series Documentos de Trabajo with number 227.
Date of creation: 2002
Date of revision:
Publication status: Published as "The Effect of a Constant or a Declining Discount Rate on Optimal Investment Timing", Journal of Applied Economics Letters, Volume 10, Number 10, 2003.
Declining discounting; exponential discounting; hyperbolic discounting; investment timing; project evaluation;
Other versions of this item:
- Gonzalo Edwards, 2003. "The effect of a constant or a declining discount rate on optimal investment timing," Applied Economics Letters, Taylor and Francis Journals, vol. 10(10), pages 657-659.
- D90 - Microeconomics - - Intertemporal Choice and Growth - - - General
- H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
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- Newell, Richard G. & Pizer, William A., 2003.
"Discounting the distant future: how much do uncertain rates increase valuations?,"
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American Economic Review,
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- Joseph Eisenhauer & Luigi Ventura, 2006. "The prevalence of hyperbolic discounting: some European evidence," Applied Economics, Taylor and Francis Journals, vol. 38(11), pages 1223-1234.
- Gonzalo Edwards, 2002. "La Tasa de Descuento en Proyectos de Largo Plazo," Documentos de Trabajo 231, Instituto de Economia. Pontificia Universidad Católica de Chile..
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