The analysis of social interest rate in Trinidad and Tobago

Abstract

In this article a Social Interest Rate (SIR) is derived for Trinidad and Tobago on the basis of an individualistic, independent and multi‐period consumption utility function. The component parameters of this rate are: a mortality‐based pure time discount rate, the growth rate of per capita real consumption and the elasticity of marginal utility of consumption. The final result is 6.2 per cent which is plausible and thus can be readily used by economic planners in various resource allocation policies in that country.