Questions on Cost-Benefit Analysis and a Discussion of Present Answers: How Should One Determine the Social Discount Rate to Be Announced?

Roger Guesnerie and Joël Maurice
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Roger Guesnerie: CdF (institution) - Collège de France, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Joël Maurice: ENPC - École nationale des ponts et chaussées

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Abstract: In the wake of the CBA used for public investment programming in France, new recommendations have been formulated for projects whose advantages (costs or benefits) are exposed to macroeconomic risks (correlation with GDP per capita), distinguishing between classically Gaussian hazards and "rare disasters" à la Barro. Taking rare disasters into account significantly modifies the value of the discount rate, along with the mathematical expectation of the advantages, and accentuates the distinction between procyclical and counter-cyclical projects.

Keywords: Business; Economics; Macroeconomic risks on projects; Procyclical versus counter-cyclical projects; Which discount rate; Which expected advantages (search for similar items in EconPapers)
Date: 2023-09
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Published in Journal of Applied Business and Economics, 2023, 25 (7), pp.111-125. ⟨10.33423/jabe.v25i7.6731⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-04811098

DOI: 10.33423/jabe.v25i7.6731

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