Empirical and public choice evidence for hyperbolic social discount rates and the implications for intergenerational discounting

The derivation of the correct discount rate for intergenerational projects in Cost Benefit Analysis is particularly contentious. Public choice has resulted in lower discretionary exponential discount rates for many intergenerational projects in Britain and the USA. This is shown to be strong indirect evidence that the true social discount rate may be a hyperbolic (rather than an exponential) function. There is also empirical evidence for this hypothesis. The hyperbolic nature of discounting is also a standard finding in the behavioural sciences. For intergenerational time frames hyperbolic discount rates should be employed together with exponential discount rates in cost-benefit sensitivity analyses.Sincere thanks to Maureen Cropper and Paul Portney for supplying their survey results and to Elaine Barrow and Phillip Judge for graphics assistance. Two anonymous referees also provided valuable comments.     

Dynamism and embeddedness: towards a lower road? British subsidiaries of American multinationals

This article examines the effects of changes in the dynamics of the American national business system on industrial relations settlements in the UK subsidiaries of American multinational corporations (MNCs). While institutionalist analyses of country‐of‐origin and host‐country effects must take account of changes in national business systems, such as the rise of the shareholder value ideology in the USA, empirical analysis reveals a pattern of pathway adjustment rather than radical change in employment relations at the UK subsidiary level. This suggests that although US MNCs are embedded within the American business system, their subsidiaries are not passive ciphers but autonomous sites through which influences must pass.     

On the transformation of theorems

Professor W. Ethier (1979) has argued that replacing land by capital in the familiar 2×2 trade model leaves the four basic theorems unaffected, with time-phasing and a positive interest rate. In fact, Ethier's HOS and FPE theorems are different in kind from the traditional ones. The traditional theorems predict certain results in terms of trade-independent data: Ethier's theorems describe equilibrium in terms of factor endowments and intensities defined by equilibrium prices. Hence his theorems do not support his central message that nothing is lost in trade theory by treating capital as if it were homogeneous land.