Social Discount Rates for Six Transition Countries


Secilmis E., AKBULUT H.

EKONOMICKY CASOPIS, vol.67, no.6, pp.629-646, 2019 (Peer-Reviewed Journal) identifier identifier

  • Publication Type: Article / Article
  • Volume: 67 Issue: 6
  • Publication Date: 2019
  • Journal Name: EKONOMICKY CASOPIS
  • Journal Indexes: Social Sciences Citation Index, Scopus
  • Page Numbers: pp.629-646
  • Keywords: social discount rate, transition economies, project appraisal, TIME-PREFERENCE, CROWDING-OUT, PUBLIC-INVESTMENTS, MARGINAL UTILITY, COST, CONSUMPTION, APPRAISAL, PROJECTS, HISTORY, RETURN

Abstract

The key role of public sector investments in economic transformations makes the choice of social discount rate especially crucial for transition countries. The aim of this study is to estimate the social discount rates of six transition economies - Czech Republic, Estonia, Hungary, Latvia, Poland, Slovak Republic by using two different approaches. We observe that the estimates produced by tax approach are concentrated in a band between 3.3% (Hungary) and 6.91% (Estonia). In comparison with tax approach estimations, the social discount rates obtained by food demand approach are lower for all selected countries: the lowest value is 1.94% (Czech Republic) and the highest is 3.5% (Latvia).