ABSTRACT
It was pointed out in Chapter 1 that the relevant interest rates for economic decision making are the post-tax ex-ante real interest rates. Leaving aside the question of taxes for the moment, even the estimation of pre-tax ex-ante real interest rates poses problems because they are not directly observable in general. Even for the index-linked bonds, where such rates are directly observable, there are serious difficulties, as discussed below. This chapter briefly describes the various approaches to the estimation of such rates in the literature and the approaches used by us.
