Wage Net Discount Rates: Unmasking the Impact of COVID-19

Wage net discount rates (WNDRs) are formulated for the post-1980 era using average weekly earnings growth and various available Treasury instruments of between 3-month and 10-year duration. We examine the time series properties of WNDRs and find stronger stationarity evidence exists for subsets of the data compared to the entire sample. The COVID-19 era data present difficulties in estimating a mean WNDR from a stationary series. Instead, we recommend a sample frame that ends just prior to the pandemic until more data become available. Using this sample frame, we estimate mean WNDRs from stationary subseries that are within [-1.56, -1.01] across varying Treasury securities