Term Structures and Scenario-Based Social Discount Rates under Smooth Ambiguity

Cited 0 time in webofscience Cited 0 time in scopus
  • Hit : 139
  • Download : 0
Many studies estimate social discount rates based on the Ramsey rule. The rule has been augmented in various ways in order to reflect the decision maker's attitude toward risk and uncertainty. In this article, we adopt the recursive utility with ambiguity of Ju and Miao and develop a general social discount rate formula via the utility gradient method. The derived formula allows us to obtain the three-way explicit separation of risk aversion, intertemporal substitution, and ambiguity aversion as in Traeger. It also goes beyond the classical two-period setting and thus term structures of social discount rates under ambiguity can be studied. Due to the generality of this approach, we can directly apply the well-known growth scenarios under climate change so as to derive scenario-based social discount rates, which can be used as a guide in practice to assess climate change policies or related projects.
Publisher
TAYLOR & FRANCIS INC
Issue Date
2021-04
Language
English
Article Type
Article
Citation

ENGINEERING ECONOMIST, v.66, no.2, pp.121 - 149

ISSN
0013-791X
DOI
10.1080/0013791X.2020.1781990
URI
http://hdl.handle.net/10203/285512
Appears in Collection
MT-Journal Papers(저널논문)
Files in This Item
There are no files associated with this item.

qr_code

  • mendeley

    citeulike


rss_1.0 rss_2.0 atom_1.0