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The social discount rate

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  • Andrew Caplin
  • John V. Leahy

Abstract

In welfare theory it is standard to pick the consumption stream that maximizes the welfare of the representative agent. We argue against this position, and show that a benevolent social planner will generally place a greater weight on future consumption than does the representative agent.

Suggested Citation

  • Andrew Caplin & John V. Leahy, 2001. "The social discount rate," Discussion Paper / Institute for Empirical Macroeconomics 137, Federal Reserve Bank of Minneapolis.
  • Handle: RePEc:fip:fedmem:137
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    More about this item

    Keywords

    Welfare;

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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