Economics at your fingertips  

Význam forem diskontování v ekonomickém modelování

The role of discounting type in economic modelling

Michal Andrle and Jan Bruha ()

Politická ekonomie, 2004, vol. 2004, issue 6

Abstract: This paper reviews important approaches to discounting in economic modelling. It summarizes historical approaches and discusses why exponential discounting has been adopted as a widely accepted benchmark. The article then presents hyperbolic discounting as an alternative, while stresses different interpretation of discounting in positive and normative economics. In positive economics, the paper uses recent evidence to show that some observed regularities implied by exponential discounting are counterfactual and we illustrate different implications of the two approaches to discounting using numerical simulations of a stylized model of investment-consump- tion behaviour. It also concerns with applications of discounting in normative models of environmental economics. Many authors claim that exponential discounting, when used for long-term project evaluation, leads to an unfair treatment with generations living in a far future. We construct a model of optimal non-renewable resource exploitation to illustrate different normative implications of exponential and hyperbolic discounting.

Keywords: discounting; economic modelling; consumer behaviour; environmental economics (search for similar items in EconPapers)
JEL-codes: D11 E2 Q0 (search for similar items in EconPapers)
Date: 2004
References: Add references at CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link) (text/html)
free of charge

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:

Ordering information: This journal article can be ordered from
Redakce Politické ekonomie, Vysoká škola ekonomická, nám. W. Churchilla 4, 130 67 Praha 3

Access Statistics for this article

Politická ekonomie is currently edited by Martin Mandel

More articles in Politická ekonomie from University of Economics, Prague Contact information at EDIRC.
Bibliographic data for series maintained by Frantisek Sokolovsky ().

Page updated 2019-10-08
Handle: RePEc:prg:jnlpol:v:2004:y:2004:i:6:id:488