Net Discount Rates: Does Duration Matter?

Some economists employ averages of net discount rates over historical periods as proxies for future net discount rates. This raises the question of the time period, or duration, over which to calculate the average net discount rate. Two testing procedures are used to examine this question. The first uses moving average net discount rates over a number of years. A more refined procedure tests the impacts of duration by disaggregating the moving averages. Although the study does offer some insight, results are not conclusive and suggest a need for further research.

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	Rosenbaum, David I Professor of Economics Expertise: Antitrust Managerial Economics Public Utilities Economics CBA 360 P.O. Box 880489 University of Nebraska-Lincoln Lincoln, NE 68588-0489, USA Phone: (402) 472-2318 Fax: (402) 472-9700 drosenbaum1@unl.edu	Rosenbaum, David I	Economics