01822cam a22002537 4500001000700000003000500007005001700012008004100029100002400070245012600094260006600220490004200286500001500328520066500343530006101008538007201069538003601141690007201177690012501249710004201374830007701416856003801493856003701531w18157NBER20160506075859.0160506s2012 mau||||fs|||| 000 0 eng d1 aWeitzman, Martin L.14aThe Ramsey Discounting Formula for a Hidden-State Stochastic Growth Processh[electronic resource] /cMartin L. Weitzman. aCambridge, Mass.bNational Bureau of Economic Researchc2012.1 aNBER working paper seriesvno. w18157 aJune 2012.3 aThe long term discount rate is critically dependent upon projections of future growth rates that are fuzzier in proportion to the remoteness of the time horizon. This paper models such increasing fuzziness as an evolving hidden-state stochastic process. The underlying trend growth rate is an unobservable random walk hidden by noisy transitory shocks and recoverable only as a probability distribution via Bayesian updating. A simple expression is derived for the time-declining Ramsey discount rate. The components of this hidden-state Ramsey discounting formula are then analyzed, followed by a few remarks about possible implications and applications. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web. 7aQ5 - Environmental Economics2Journal of Economic Literature class. 7aQ54 - Climate • Natural Disasters and Their Management • Global Warming2Journal of Economic Literature class.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w18157.4 uhttp://www.nber.org/papers/w1815741uhttp://dx.doi.org/10.3386/w18157