Comment on Burgess and Zerbe's "Appropriate Discounting for Benefit-Cost Analysis"
This is a comment on a paper by David F. Burgess and Richard O. Zerbe. It derives a different set of conclusions than the cited authors do from the customary premises underlying benefit-cost analysis. It concludes that capital should be shadow priced, and that the appropriate discount rate to use in benefit-cost analysis is the interest rate of the capital market to which the public sector has access. It proposes that a plausible source of the great divergence in approaches to discounting stems from different answers being given to the question of whether present day consumption has a future consumption opportunity cost.
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Volume (Year): 2 (2011)
Issue (Month): 3 (August)
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References listed on IDEAS
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- Dreze, Jean & Stern, Nicholas, 1990. "Policy reform, shadow prices, and market prices," Journal of Public Economics, Elsevier, vol. 42(1), pages 1-45, June.
- Robert J. Brent, 2006. "Applied Cost–Benefit Analysis, Second Edition," Books, Edward Elgar Publishing, number 3477.
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