INTERGENERATIONAL EQUITY AND THE DISCOUNT RATE FOR POLICY ANALYSIS

@article{Mertens2011INTERGENERATIONALEA,
  title={INTERGENERATIONAL EQUITY AND THE DISCOUNT RATE FOR POLICY ANALYSIS},
  author={Jean-François Mertens and Anna Rubinchik},
  journal={Macroeconomic Dynamics},
  year={2011},
  volume={16},
  pages={61 - 93}
}
For two independent principles of intergenerational equity, the implied discount rate equals the growth rate of real per capita income, say, 2%, thus falling right into the range suggested by the U.S. Office of Management and Budget. To prove this, we develop a simple tool to evaluate small policy changes affecting several generations, by reducing the dynamic problem to a static one. A necessary condition is time invariance, which is satisfied by any common solution concept in an overlapping… 

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