We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Discount Rates for Public Investment in Closed and Open Economies.
- Authors
Sandmo, Agnar; DrÈ&;eze, Jacques H.
- Abstract
Our objective in this paper is to determine the rate of discount for public investment which is optimal on efficiency grounds, given that <BR> 1 We are indebted to Giorgio Basevi and Henry Tulkens for reading the manuscript of this paper and making useful suggestions. We also thank Maurice Marchand, Jan Mossin and David Newbery for valuable comments and criticism. <BR> 2 References in square brackets are listed on pp. 411-12, below. <BR> there exists a wedge between the marginal rate of time preference and the marginal productivity of private capital (due, for instance, to the corporation income tax). This is an exercise in the theory of second-best welfare economics. We shall first analyse the problem for a closed economy. Then we shall extend the discussion to an open economy to allow for foreign lending and foreign direct investment. In Section VII we provide some numerical illustrations of our main conclusions.
- Subjects
PUBLIC investments; PERFECT competition; CONSUMPTION (Economics); INVESTMENTS; MARGINAL productivity; CAPITAL productivity
- Publication
Economica, 1971, Vol 38, Issue 152, p395
- ISSN
0013-0427
- Publication type
Article
- DOI
10.2307/2551880