| Author: | Horvath, P. |
| Title: | Compounding/discounting in continuous time |
| Journal: | Quarterly Journal of Economics
1995 : FALL, VOL. 35:3, p. 315-326 |
| Index terms: | TIME ECONOMICS FINANCE |
| Language: | eng |
| Abstract: | This paper suggests that the current method for compounding and discounting in continuous time may be inaccurate and misleading. The exant continuous time model is based on an arithmetic average. Using the geometric mean, an alternative , simple, model is suggested. An example using simulated data indicates that the potential error is meaningful in terms of size and impact on statistical analyses. |
SCIMA