Gollier, Christian (2015) Discounting, Inequality and Economic Convergence. Journal of Environmental Economics and Management, vol.69. pp. 53-61.

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Identification Number : 10.1016/j.jeem.2014.10.005


The aim of this paper is to examine the impact of inequalities and economic convergence on the efficient discount rate when international credit and risk-sharing markets are inefficient. We consider an economy in which initial consumption levels and growth expectations are heterogeneous. In the benchmark case in which relative inequalities are permanent and relative risk aversion is constant, inequalities do not affect the discount rate. We derive necessary and sufficient conditions under which permanent inequalities reduce the discount rate. We also show that the anticipation of economic convergence raises the efficient discount rate when relative prudence is larger than unity.

Item Type: Article
Language: English
Date: January 2015
Refereed: Yes
Uncontrolled Keywords: Prudence, Concordance, Discount rate, Climate change
JEL Classification: E43 - Determination of Interest Rates; Term Structure of Interest Rates
G11 - Portfolio Choice; Investment Decisions
G12 - Asset Pricing; Trading volume; Bond Interest Rates
Q54 - Climate; Natural Disasters
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 16 Mar 2015 14:56
Last Modified: 02 Apr 2021 15:49
OAI Identifier: oai:tse-fr.eu:29100
URI: https://publications.ut-capitole.fr/id/eprint/16713
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