Government discounting controversies: changing prices, opportunity costs and systematic risk

Michael Spackman

No 67, GRI Working Papers from Grantham Research Institute on Climate Change and the Environment

Abstract: The conceptual basis and numerical quantification of the time discount rate (or rates) to use for public sector analysis have been debated for over half a century. This paper addresses those aspects that are in principle amenable to formal analysis, with minimal need for judgements about ethics or administrative practicability. These include controversies, many of them very long lasting, about the discounting of quantities measured in the numeraire of marginal utility, about the opportunity cost of public capital and current spending, and about the relevance of equity risk premia to government appraisal. It is concluded that, while current UK government practice in these respects is sound, some positions that are still supported widely elsewhere do not stand up to close examination, but are likely to continue to be held as matters of faith.

Date: 2011-11
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.lse.ac.uk/GranthamInstitute/wp-content/ ... -controversies_1.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lsg:lsgwps:wp67

Access Statistics for this paper

More papers in GRI Working Papers from Grantham Research Institute on Climate Change and the Environment Contact information at EDIRC.
Bibliographic data for series maintained by The GRI Administration ().