Publication Type

Journal Article

Version

publishedVersion

Publication Date

9-2021

Abstract

Singapore's market for new privately developed apartments exhibits wide quasi-experimental variation in ownership tenure. We develop an empirical model in which prices are decomposed into the utility of housing services and a factor that shifts with asset tenure and the discount rate schedule, which we discipline to vary smoothly over time. We estimate discount rates that decline over time and, to accommodate the observed price differences, fall to 0.5-1.5% p.a. by year 400. The finding that households making sizable transactions do not entirely discount benefits accruing centuries from today is relevant, with the appropriate risk adjustment, for evaluating climate-change investments.

Keywords

Social discount rate, declining discount rates, policy evaluation, long time horizon, climate change, real estate

Discipline

Asian Studies | Real Estate

Research Areas

Applied Microeconomics

Publication

Journal of Applied Econometrics

Volume

37

Issue

2

First Page

330

Last Page

350

ISSN

0883-7252

Identifier

10.1002/jae.2867

Publisher

Wiley: 24 months

Additional URL

http://doi.org/10.1002/jae.2867

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