
Published online:
19 October 2017
Published in print:
11 November 2012
Online ISBN:
9781400845408
Print ISBN:
9780691148762
Contents
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A Decision Criterion Under Risk A Decision Criterion Under Risk
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Risk Aversion Risk Aversion
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Prudence and Precautionary Saving Prudence and Precautionary Saving
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Prudence and Downside Risk Aversion Prudence and Downside Risk Aversion
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The Extended Ramsey Rule as an Approximation The Extended Ramsey Rule as an Approximation
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The Extended Ramsey Rule in the Lognormal Case The Extended Ramsey Rule in the Lognormal Case
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Calibration of the Extended Ramsey Rule Using Time Series Data Calibration of the Extended Ramsey Rule Using Time Series Data
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Calibration of the Extended Ramsey Rule Using Cross-Section Data Calibration of the Extended Ramsey Rule Using Cross-Section Data
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Summary of Main Results Summary of Main Results
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Appendix Appendix
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References References
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Chapter
3 Extending the Ramsey Rule to an Uncertain Economic Growth
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Pages
41–59
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Published:November 2012
Cite
Gollier, Christian, 'Extending the Ramsey Rule to an Uncertain Economic Growth', Pricing the Planet's Future: The Economics of Discounting in an Uncertain World (Princeton, NJ , 2012; online edn, Princeton Scholarship Online, 19 Oct. 2017), https://doi.org/10.23943/princeton/9780691148762.003.0003, accessed 9 May 2025.
Abstract
This chapter considers the prospect of uncertainty in planning for the future. In fact, it is commonly accepted that individuals are ready to sacrifice more in the present for the future when this future becomes more uncertain. Keynes was the first to mention this idea by pointing out the precautionary motive for saving. What is desirable at the individual level is also desirable at the collective one. Thus the chapter argues that a society that wants to reinforce the incentive to invest for the future because of its uncertain nature should select a smaller discount rate to evaluate the set of all possible investment projects.
Subject
Economic Development and Growth
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