The Economic Opportunity Cost of Capital for Canada - An Empirical Update

Glenn Jenkins () and Chun-Yan Kuo

No 273609, Queen's Economics Department Working Papers from Queen's University - Department of Economics

Abstract: The social or economic discount rate is the threshold rate used to calculate the net present value of an investment project, a program or a regulatory intervention to see whether the proposed expenditures are economically worthwhile to undertake. The size of the economic rate of discount has been a policy issue in Canada for many years. The debate has been primarily concerned with the empirical measurement of the economic opportunity cost of funds. The purpose of this paper is to reexamine and update the empirical estimation of what is the appropriate economic discount rate for Canada. The results suggest that estimates of the economic discount rate can range from 7.78 percent to 8.39 percent real. As a consequence, we conclude that for Canada an 8 percent real rate is an appropriate discount rate to use when calculating the economic net present value of the flows of economic benefits and costs over time.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 26
Date: 2007-07
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/273609/files/qed_wp_1133.pdf (application/pdf)

Related works:
Working Paper: The Economic Opportunity Cost of Capital for Canada - An Empirical Update (2007)
Working Paper: The Economic Opportunity Cost Of Capital For Canada - An Empirical Update (2007)
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:ags:quedwp:273609

DOI: 10.22004/ag.econ.273609

Access Statistics for this paper

More papers in Queen's Economics Department Working Papers from Queen's University - Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().