Sustainability in a Risky World
28 Pages Posted: 30 Mar 2021
Date Written: March 30, 2021
This paper studies the restrictions on consumption, portfolio choice, and social discounting implied by a sustainability constraint, that utility should not be expected to decline over time, in an economy with risky investment opportunities. The sustainability constraint does not distort portfolio choice and implies a consumption-wealth ratio and social discount rate that can be considerably higher than the riskless interest rate.
Keywords: Sustainability, social discounting, consumption-wealth ratio, rate of time preference
JEL Classification: G11, H43, Q01
Suggested Citation: Suggested Citation