The Sign of Risk for Present Value of Future Losses
General Finance
2022-09-15 v1
Abstract
In the ongoing debate over discount rates and climate change, William Nordhaus has championed a higher discount rate to account for risk. Nicholas Stern has championed a lower rate. Here we prove that in the case of a stream of future losses, risk can only be represented by a lower discount rate, never a higher one.
Cite
@article{arxiv.2209.06654,
title = {The Sign of Risk for Present Value of Future Losses},
author = {Brian P. Hanley and Steve Keen},
journal= {arXiv preprint arXiv:2209.06654},
year = {2022}
}
Comments
4 pages, 1 figure