Calculating the Social Opportunity Cost Discount Rate
Two comments in this issue of the Journal address our recent article in Volume 2, Issue 2. The fundamental issue with both comments is that they confuse the financial rate of return with the opportunity cost rate of return and therefore advocate for an inappropriate basis on which to calculate the government discount rate. That is, both comments confuse the financial cost of funds, or the borrowing rate, with the economic opportunity cost of funds. We hope that this exchange advances the subject by reducing confusion.
Volume (Year): 2 (2011)
Issue (Month): 3 (August)
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- Lawrence Summers & Richard Zeckhauser, 2008.
"Policymaking for posterity,"
Journal of Risk and Uncertainty,
Springer, vol. 37(2), pages 115-140, December.
- Lawrence H. Summers & Richard J. Zeckhauser, 2008. "Policymaking for Posterity," NBER Working Papers 14359, National Bureau of Economic Research, Inc.
- Summers, Lawrence & Zeckhauser, Richard, 2008. "Policymaking for Posterity," Working Paper Series rwp08-040, Harvard University, John F. Kennedy School of Government.
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