ON THE SOCIAL RATE OF DISCOUNT

OUTSTANDING PROFESSIONAL ECONOMISTS HAVE ESTIMATED WIDELY DIVERGENT VALUES OF THE SOCIAL DISCOUNT RATE. THIS PAPER SEEKS TO CLARIFY RATHER THAN SETTLE ALL OF THE MAJOR ISSUES OUTSTANDING. IT IS CONCLUDED THAT BOTH RISK AND CORPORATE TAXES PLAY A MORE IMPORTANT ROLE THAN IS SOMETIMES ASCRIBED TO THEM. CURIOUSLY, PRIVATE RISK DERIVES ITS SIGNIFICANCE FROM THE COMPARATIVE RISKLESSNESS OF PRIVATE INVESTMENTS FROM THE POINT OF VIEW OF SOCIETY. IT IS SHOWN THAT, GIVEN THE INSTITUTIONAL ARRANGEMENTS, THERE IS AN UNAVOIDABLE INDETERMINACY IN THE CHOICE OF THE SOCIAL RATE OF DISCOUNT. FINALLY, IT IS SUGGESTED THAT INTERTEMPORAL EXTERNALITIES AFFECT THE LEVEL OF BOTH THE OPTIMAL PRIVATE AND OPTIMAL PUBLIC DISCOUNT RATES. IT IS OBSERVED THAT WANTING MORE GOVERNMENT PROJECTS IS NOT TANTAMOUNT TO A DESIRE FOR MORE LONG-TERM INVESTMENT PROJECTS BY THE GOVERNMENT. /AUTHOR/

  • Availability:
  • Supplemental Notes:
    • Vol 58, pp 788-802
  • Authors:
    • Baumol, W J
  • Publication Date: 1968-9

Media Info

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Filing Info

  • Accession Number: 00201779
  • Record Type: Publication
  • Source Agency: Traffic Systems Reviews & Abstracts
  • Files: TRIS
  • Created Date: Jul 27 1970 12:00AM