Social Discount Rates Under Persistent Risks: A Theoretical and Numerical Analysis

Hélène Schernberg

Journal of Public Economic Theory, 2025, vol. 27, issue 4

Abstract: Economic shocks can be felt for years or even decades. Social welfare functions that exhibit aversion to persistent consumption risk address several gaps in the social discounting literature. First, they allow analyzing the impact of risk aversion and dependences on discount rates. Second, they generate results with normative appeal: Persistent risk decreases the discount rates. Moreover, in the presence of persistent risk, the discount rates decrease with the social planner's risk aversion and her planning horizon. In addition, I provide an extended Ramsey equation for the persistent risk‐averse social planner as well as a numerical application.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/jpet.70046

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:bla:jpbect:v:27:y:2025:i:4:n:e70046

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1097-3923

Access Statistics for this article

Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders

More articles in Journal of Public Economic Theory from Association for Public Economic Theory Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().