Numerical Analysis of Non-Constant Discounting with an Application to Renewable Resource Management

The possibility of non-constant discounting is important in environmental and resource management problems where current decisions affect welfare in the far-distant future, as with climate change. The difficulty of analyzing models with non-constant discounting limits their application. We describe and provide software to implement an algorithm to numerically obtain a Markov Perfect Equilibrium for an optimal control problem with non-constant discounting. The software is available online. We illustrate the approach by studying welfare and observational equivalence for a particular renewable resource management problem.


Issue Date:
2006
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/7199
Total Pages:
30
JEL Codes:
C63; Q20
Series Statement:
CUDARE Working Paper
1019




 Record created 2017-04-01, last modified 2017-08-23

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