Pricing the Planet's Future

The Economics of Discounting in an Uncertain World
Erscheinungsjahr 2012
ISBN: 978-0-691-14876-2
Verlag: Princeton University Press

Buch, Englisch, 248 Seiten, Format (B × H): 161 mm x 241 mm, Gewicht: 498 g

Our path of economic development has generated a growing list of environmental problems including the disposal of nuclear waste, exhaustion of natural resources, loss of biodiversity, climate change, and polluted land, air, and water. All these environmental problems raise the crucial challenge of determining what we should and should not do for future generations. It is also central to other policy debates, including, for example, the appropriate level of public debt, investment in public infrastructure, investment in education, and the level of funding for pension benefits and for research and development. Today, the judge, the citizen, the politician, and the entrepreneur are concerned with the sustainability of our development. The objective of Pricing the Planet's Future is to provide a simple framework to organize the debate on what we should do for the future. A key element of analysis by economists is the discount rate--the minimum rate of return required from an investment project to make it desirable to implement. Christian Gollier outlines the basic theory of the discount rate and the various arguments that favor using a smaller discount rate for more distant cash flows. With principles that can be applied to many policy areas, Pricing the Planet's Future offers an ideal framework for dynamic problems and decision making.

Autoren/Hrsg.

Gollier, Christian

Fachgebiete

• Wirtschaftswissenschaften Finanzsektor & Finanzdienstleistungen Internationale Finanzmärkte
• Wirtschaftswissenschaften Volkswirtschaftslehre Volkswirtschaftslehre Allgemein
• Wirtschaftswissenschaften Finanzsektor & Finanzdienstleistungen Finanzsektor & Finanzdienstleistungen: Allgemeines
• Wirtschaftswissenschaften Volkswirtschaftslehre Internationale Wirtschaft Internationale Finanzmärkte

Inhaltsverzeichnis

Preface vii

Introduction 1
Part I: The Simple Economics of Discounting

1 Three Ways to Determine the Discount Rate 17

2 The Ramsey Rule 26

3 Extending the Ramsey Rule to an Uncertain
Economic Growth 41
Part II: The Term Structure of Discount Rates

4 Random Walk and Mean-Reversion
61

5 Markov Switches and Extreme Events 74

6 Parametric Uncertainty and Fat Tails 84

7 The Weitzman Argument 98

8 A Theory of the Decreasing Term Structure
of Discount Rates 111
Part III: Extensions

9 Inequalities 131

10 Discounting Non-monetary
Benefits 149

11 Alternative Decision Criteria 168
Part IV: Evaluation of Risky and Uncertain Projects

12 Evaluation of Risky Projects 185

13 The Option Value of Uncertain Projects 203

14 Evaluation of Non-marginal
Projects 215
Global Conclusion 225

Index 227

Über Autor(innen)

Gollier, Christian
Christian Gollier is professor of economics at the University of Toulouse and director of the Toulouse School of Economics. He is the author of "The Economics of Risk and Time" and the coauthor of "Economic and Financial Decisions under Risk" (Princeton).