The Role of Discount Rates in Investment and Employment Growth

2019 ◽  
Author(s):  
Stig Vinther Møller ◽  
Richard Priestley
Keyword(s):  
Employment Growth ◽  
Discount Rates

scholarly journals Banking and Industrialization

2018 ◽  
Vol 17 (6) ◽  
pp. 1753-1796 ◽  
Author(s):  
Stephan Heblich ◽  
Alex Trew
Keyword(s):  
Standard Deviation ◽  
Industrial Revolution ◽  
Employment Growth ◽  
Standard Deviation Increase ◽  
Percentage Points ◽  
Industrial Employment ◽  
Employment Share ◽  
Capital Intensive ◽  
Employment Data

AbstractWe establish a causal role for banking access in the spread of the Industrial Revolution over the period 1817–1881 by exploiting unique employment data from 10,528 parishes across England and Wales and a novel instrument. We estimate that a one standard deviation increase in 1817 finance employment increases annualized industrial employment growth by 0.93 percentage points. We establish the role of structural transformation as an underlying growth mechanism and show that banking access: (i) increases the industrial employment share; (ii) stimulates urbanization; and (iii) fosters inter-industry transition to high TFP, intermediate and capital-intensive sub-sectors.

scholarly journals The Economics of the Climate

2017 ◽  
Vol 55 (3) ◽  
pp. 1046-1063 ◽  
Author(s):  
Geoffrey Heal
Keyword(s):  
Complex Systems ◽  
Integrated Assessment ◽  
Discount Rates ◽  
Risk And Uncertainty ◽  
Policy Choices ◽  
Integrated Assessment Models ◽  
Qualitative Understanding ◽  
Climate Problem

I review the economic characteristics of the climate problem, focusing on the choice of discount rates in the presence of a stock externality, risk and uncertainty/ambiguity, and the role of integrated assessment models (IAMs) in analyzing policy choices. I suggest that IAMs can play a role in providing qualitative understanding of how complex systems behave, but are not accurate enough to provide quantitative insights. Arguments in favor of action on climate issues have to be based on aversion to risk and ambiguity and the need to avoid a small but positive risk of a disastrous outcome. ( JEL D61, H43, Q48, Q54, Q58)

scholarly journals Risk, the required rate of return, and aspects of South African management practice

1992 ◽  
Vol 23 (2) ◽  
pp. 46-54
Author(s):  
S. Paulo ◽  
J. K. Bosch
Keyword(s):  
Sensitivity Analysis ◽  
South African ◽  
Management Practice ◽  
Risk Premia ◽  
Pivotal Role ◽  
Rate Of Return ◽  
Discount Rates ◽  
Financial Decisions ◽  
Empirical Survey

The pivotal role of the required rate of return to all financial decisions is well documented in the financial literature. However, many misconceptions exist with regard to the specification of the components of the required rate of return. In order to learn more about the possible components of the required rate of return, particularly the different risk premia, empirical information on the determination and use of the required rate of return by South African financial managers was obtained. From the findings of the empirical survey it was evident that the required rate of return is adjusted for a variety of risks. This enables the inference to be drawn that risk adjusted discount rates are being used when taking financial decisions. Further, it is evident that sensitivity analysis and judgemental approaches are used when adjustments are made to the required rate of return.

scholarly journals Individual Time Preferences and Energy Efficiency

2015 ◽  
Vol 105 (5) ◽  
pp. 196-200 ◽  
Author(s):  
Richard G. Newell ◽  
Juha Siikamäki
Keyword(s):  
Energy Efficiency ◽  
Policy Evaluation ◽  
Cash Flows ◽  
Time Preferences ◽  
Discount Rates ◽  
Product Choices ◽  
Key Driver ◽  
Flows Over Time ◽  
Efficiency Gap

We examine the role of individual discount rates in energy efficiency decisions using evidence from an extensive survey of US homeowners to elicit preferences for energy efficiency and cash flows over time. We find considerable heterogeneity in individual discount rates. We also find that individual time preferences systematically influence willingness to invest in energy efficiency, as measured through product choices, required payback periods, and energy efficiency tax credit claims. Education is a key driver of individual discount rates. Our findings highlight the importance of individual discount rates to understanding energy efficiency investments, the energy-efficiency gap, and policy evaluation.

Sign in / Sign up

Export Citation Format

Share Document