Numerical Analysis of Non-Constant Discounting with an Application to Renewable Resource Management

Tomoki Fujii and Larry Karp

No 7199, CUDARE Working Papers from University of California, Berkeley, Department of Agricultural and Resource Economics

Abstract: The possibility of non-constant discounting is important in environmental and resource management problems where current decisions affect welfare in the far-distant future, as with climate change. The difficulty of analyzing models with non-constant discounting limits their application. We describe and provide software to implement an algorithm to numerically obtain a Markov Perfect Equilibrium for an optimal control problem with non-constant discounting. The software is available online. We illustrate the approach by studying welfare and observational equivalence for a particular renewable resource management problem.

Keywords: Research Methods/ Statistical Methods; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 30
Date: 2006
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Working Paper: Numerical Analysis of Non-Constant Discounting with an Application to Renewable Resource Management (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ucbecw:7199

DOI: 10.22004/ag.econ.7199

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