Jump to ContentJump to Main Navigation
Pricing the Planet's FutureThe Economics of Discounting in an Uncertain World$
Users without a subscription are not able to see the full content.

Christian Gollier

Print publication date: 2012

Print ISBN-13: 9780691148762

Published to Princeton Scholarship Online: October 2017

DOI: 10.23943/princeton/9780691148762.001.0001

Show Summary Details
Page of

PRINTED FROM PRINCETON SCHOLARSHIP ONLINE (www.princeton.universitypressscholarship.com). (c) Copyright Princeton University Press, 2022. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in PRSO for personal use.date: 28 June 2022

Parametric Uncertainty and Fat Tails

Parametric Uncertainty and Fat Tails

(p.84) 6 Parametric Uncertainty and Fat Tails
Pricing the Planet's Future

Christian Gollier

Princeton University Press

This chapter shows how the probability distribution for economic growth is subject to some parametric uncertainty. There is a limited data set for the dynamics of economic growth, and the absence of a sufficiently large data set to estimate the long-term growth process of the economy implies that its parameters are uncertain and subject to learning in the future. This problem is particularly crucial when its parameters are unstable, or when the dynamic process entails low-probability extreme events. Thus, the rarer the event, the less precise the estimate of its likelihood. This builds a bridge between the problem of parametric uncertainty, and the one of extreme events.

Keywords:   parametric uncertainty, extreme events, economic growth, long-term growth, fat tails

Princeton Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us.