Statistical analysis and stochastic interest rate modeling for valuing the future with implications in climate change mitigation

@article{Perello2019StatisticalAA,
  title={Statistical analysis and stochastic interest rate modeling for valuing the future with implications in climate change mitigation},
  author={Josep Perell'o and Miquel Montero and Jaume Masoliver and J. Doyne Farmer and John Geanakoplos},
  journal={arXiv: Mathematical Finance},
  year={2019}
}
High future discounting rates favor inaction on present expending while lower rates advise for a more immediate political action. A possible approach to this key issue in global economy is to take historical time series for nominal interest rates and inflation, and to construct then real interest rates and finally obtaining the resulting discount rate according to a specific stochastic model. Extended periods of negative real interest rates, in which inflation dominates over nominal rates, are… Expand

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