Discount Factors and Thresholds : Foreign Investment When Enforcement Is Imperfect

@inproceedings{ASIEDU2000DiscountFA,
  title={Discount Factors and Thresholds : Foreign Investment When Enforcement Is Imperfect},
  author={ELIZABETH ASIEDU},
  year={2000}
}
  • ELIZABETH ASIEDU
  • Published 2000
We consider a model that provides insight into the well-known Folk theorem in economics that when the discount factor β is sufficiently close to 1, expropriation will never occur. Although this Folk theorem is true in our model, our perspective is different. The discount factorβ often is described as a “deep structural parameter” that is difficult to alter at a point in time. In contrast, we analyze the determinants of two thresholds β andβ∗ that segment the unit interval on which β is defined… CONTINUE READING

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