Discounting, Distribution and Disaggregation

Yamaguchi, Rintaro (2012): Discounting, Distribution and Disaggregation. Forthcoming in: Scottish Journal of Political Economy

Abstract

To consider the implication of disaggregated consumption and discounting, we study discounting in a world composed of the rich and the poor, a standard setting in the literature of cost-benefit analysis with distributional considerations. We derive several discount rates for different numeraires, which would enable us to discuss intergenerational and intragenerational equity in common terms. In the example of CES-CRRA utility, we also show that disaggregated discount rates may vary owing to several factors. One important parameter of such –inequality aversion– can be determined in unknown weighting of intergenerational and intragenerational concerns.

• Item Type: MPRA Paper
• Language: English
• Keywords: Discounting; income distribution; climate change; environmental stock
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O44 - Environment and Growth; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q43 - Energy and the Macroeconomy; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate ; Natural Disasters and Their Management ; Global Warming; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q56 - Environment and Development ; Environment and Trade ; Sustainability ; Environmental Accounts and Accounting ; Environmental Equity ; Population Growth

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