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Discounting In Intergenerational Project Appraisal – Efficient Versus Just Decision Making

Author

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  • Monika Foltyn-Zarychta

    () (Faculty of Finance and Insurance, "Karol Adamiecki" University of Economics, Katowice, Poland)

Abstract

The problem of long term public investment appraisal, especially those affecting future genera-tions is a complex issue consisting of the questions of the valuation of inputs and outputs, uncertainty and the problem of dealing with effects emerging in different moments of time. The last problem is usually solved by using discounting procedure. The paper aims at analyzing the definition of the discount rate in project appraisal procedure in the light of effectiveness and justice of intergenerational investment decision making. The analysis in-cludes answering the question of the rationale for discounting in short perspective in certain appraisal procedures concerning efficient and just decision criteria. Then, selected ethical approaches to future generations rights are presented as the basis for establishing the connection between the discount rate and intergenerational justice. Finally, various levels of discount rate are analyzed assuming different rights assignment to present and future generations.

Suggested Citation

  • Monika Foltyn-Zarychta, 2010. "Discounting In Intergenerational Project Appraisal – Efficient Versus Just Decision Making," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 57, pages 289-303, november.
  • Handle: RePEc:aic:journl:y:2010:v:57:p:289-303
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    More about this item

    Keywords

    public investment; investment project appraisal; discount rate;

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

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