Do distant rent flows matter? Inferring discount rates from leasehold apartments in Denmark

Carsten Andersen

Economics Letters, 2022, vol. 219, issue C

Abstract: I estimate medium and long-run discount rates in the Danish housing market. From leasehold apartment sales I observe transactions of use rights for 34–75 years, a relevant yet understudied horizon for trade-offs of current costs and future benefits. In contrast to related studies of leaseholds I find a discount rate of 5.4% which is more on par with conventional estimates of the real return to capital. Nonparametric estimation of the term schedule suggests a flat pattern.

Keywords: Discounting; Social discount rate; Hedonic estimation; Cost–benefit analysis; Climate change; Leaseholds (search for similar items in EconPapers)
JEL-codes: D6 H43 Q51 Q58 R3 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:219:y:2022:i:c:s0165176522002919

DOI: 10.1016/j.econlet.2022.110798

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