Template-type: ReDIF-Paper 1.0
Author-Name: Pamela Greene
Title: The Effects of Federal Estate Tax Policy on Charitable Contributions: Technical Paper 2001-2
Abstract: Tax policy encourages charitable contributions during an individual’s life through both the personal income tax and the estate tax. The effect of the income tax on contributions is well known. Because annual charitable contributions reduce the size of an estate, and hence the likely estate tax burden, the estate tax should also affect contributions. Recently, Auten and Joulfaian (1996) studied that issue using the tobit method on 1982 Statistics of Income data and found that the estate tax significantly increases charitable contributions. In this study, we estimate a
Creation-Date: 2001-03-01
File-URL: https://www.cbo.gov/sites/default/files/107th-congress-2001-2002/workingpaper/20012_0.pdf
File-Format: Application/pdf
Number: 13330
Classification-JEL:
Handle: RePEc:cbo:wpaper:13330
Template-type: ReDIF-Paper 1.0
Author-Name: Edward N. Gamber
Author-Name: Juann H. Hung
Title: Does International Asynchronization Matter for the U.S. Business Cycle? Technical Paper 2001-1
Abstract: This paper proposes and investigates the "asynchronization hypothesis," which predicts that an asynchronized shock tends to have a stronger and longer effect on the U.S. business cycle than an internationally synchronized shock. The hypothesis finds empirical support in the impulse responses of U.S. output and inflation to synchronized and asynchronized shocks; those responses are estimated in a system of four-variable structural vector autoregression. It also finds support in stylized facts: the longest U.S. expansions have tended to occur when the rest of the
Creation-Date: 2001-04-01
File-URL: https://www.cbo.gov/sites/default/files/107th-congress-2001-2002/workingpaper/20011_0.pdf
File-Format: Application/pdf
Number: 13331
Classification-JEL:
Handle: RePEc:cbo:wpaper:13331
Template-type: ReDIF-Paper 1.0
Author-Name: Shinichi Nishiyama
Title: Bequests, Inter Vivos Transfers, and Wealth Distribution: Technical Paper 2000-8
Abstract: This paper extends the heterogeneous agent overlapping generations model with bequests in Nishiyama (2000) by adding two-way intergenerational altruism and inter vivos transfers. Calibrating the model to the U.S. economy, the paper measures time preference and intergenerational altruism consistent with the economy's capital-output ratio and the sizes of intergenerational transfers. In the model, households in the same dynasty play a Nash game in each period to determine their optimal consumption, working hours, inter vivos transfers, and savings. The model suggests
Creation-Date: 2000-12-01
File-URL: https://www.cbo.gov/sites/default/files/106th-congress-1999-2000/workingpaper/20008_0.pdf
File-Format: Application/pdf
Number: 13332
Classification-JEL:
Handle: RePEc:cbo:wpaper:13332
Template-type: ReDIF-Paper 1.0
Author-Name: Shinichi Nishiyama
Title: Measuring Time Preference and Parental Altruism: Technical Paper 2000-7
Abstract: This paper extends a heterogeneous agent overlapping generations model by implementing bequests-both altruistic and accidental-and measures the degrees of time preference and parental altruism through the calibration of the model to the U.S. economy. In this model, a parent household and its adult child households behave consistently and strategically to determine their optimal consumption, working hours, and savings. Based on the obtained parameters, the paper also shows the individual effects of altruistic and accidental bequests on wealth accumulation by examining the
Creation-Date: 2000-10-01
File-URL: https://www.cbo.gov/sites/default/files/106th-congress-1999-2000/workingpaper/20007_0.pdf
File-Format: Application/pdf
Number: 13333
Classification-JEL:
Handle: RePEc:cbo:wpaper:13333
Template-type: ReDIF-Paper 1.0
Author-Name: John Cadigan
Title: Family Status of Enlisted Personnel: Technical Paper 2000-6
Abstract: Family patterns for military personnel have changed dramatically since the institution of the All-Volunteer Force in 1973. Foremost among those changes has been an increase in the proportion of enlisted members with families. The percentage of enlisted service members who are married rose from approximately 40 percent in fiscal year 1973 to a peak of 57 percent in fiscal year 1994. Since then, that proportion has dropped slightly, to over 53 percent in fiscal year 1998.The changing structure of the force raises some difficult policy questions,
Creation-Date: 2000-08-01
File-URL: https://www.cbo.gov/sites/default/files/106th-congress-1999-2000/workingpaper/20006_0.pdf
File-Format: Application/pdf
Number: 13334
Classification-JEL:
Handle: RePEc:cbo:wpaper:13334
Template-type: ReDIF-Paper 1.0
Author-Name: Preston Miller
Author-Name: Larry Ozanne
Title: Forecasting Capital Gains Realizations: Technical Paper 2000-5
Abstract: As an input to its estimates of federal revenues, the Congressional Budget Office (CBO) requires an estimate of capital gains realizations in the current calendar year and forecasts of realizations for the next 10 years. The purpose of our study is to improve the accuracy of the current-year estimates. As background, we describe the models and methods that CBO now uses and briefly mention models developed at other institutions. We then discuss in detail our method for constructing a new model and compare the model’s performance with that of other models by determining how
Creation-Date: 2000-08-01
File-URL: https://www.cbo.gov/sites/default/files/106th-congress-1999-2000/workingpaper/20005_0.pdf
File-Format: Application/pdf
Number: 13335
Classification-JEL:
Handle: RePEc:cbo:wpaper:13335
Template-type: ReDIF-Paper 1.0
Author-Name: Preston Miller
Title: Some Fresh Perspectives on Price-Support Policies: Technical Paper 2000-4
Abstract: Trade protection remains a prominent feature of the current world economy and likely has significant effects on industries and macroeconomies. In this paper a particular type of policy, price supports, is analyzed in a two-country, dynamic, general equilibrium model. This model brings new perspectives to the analysis in that it is monetary and has labor mobility within countries between the traded-goods and non-traded-goods sectors. It is found that: (1) The introduction of price supports in an economy benefits only the agents currently working in the traded-goods sector. (
Creation-Date: 2000-07-01
File-URL: https://www.cbo.gov/sites/default/files/106th-congress-1999-2000/workingpaper/20004_0.pdf
File-Format: Application/pdf
Number: 13336
Classification-JEL:
Handle: RePEc:cbo:wpaper:13336
Template-type: ReDIF-Paper 1.0
Author-Name: Dan Chin
Author-Name: John Geweke
Author-Name: Preston Miller
Title: Predicting Turning Points: Technical Paper 2000-3
Abstract: In this paper, we seek to develop a reliable method to predict turning points in observed economic variables. Our method is designed so that it can be used day to day with the information that is available at the time. We illustrate our method with respect to a particular variable: the civilian unemployment rate (UR). Our method applies as well to numerous other economic variables.
Creation-Date: 2000-05-01
File-URL: https://www.cbo.gov/sites/default/files/106th-congress-1999-2000/workingpaper/20003_0.pdf
File-Format: Application/pdf
Number: 13337
Classification-JEL:
Handle: RePEc:cbo:wpaper:13337
Template-type: ReDIF-Paper 1.0
Author-Name: Theresa J. Devine
Title: Social Security Options for Reducing Poverty Among Older Women: Technical Paper 2000-2
Abstract: This paper examines changes in Social Security that have been proposed as ways to reduce poverty among elderly women. For each option, the paper asks three questions: How much would the option reduce elderly poverty? How much would the option cost? How would the option affect the relationship between payroll taxes and benefits? In general, the proposed changes in Social Security present trade-offs: the broader the target group and the greater the benefit or income guarantee, the larger the expected impact of an option on elderly poverty. But these features would also raise
Creation-Date: 2000-05-01
File-URL: https://www.cbo.gov/sites/default/files/106th-congress-1999-2000/workingpaper/20002_0.pdf
File-Format: Application/pdf
Number: 13338
Classification-JEL:
Handle: RePEc:cbo:wpaper:13338
Template-type: ReDIF-Paper 1.0
Author-Name: Jagadeesh Gokhale
Author-Name: Benjamin Page
Author-Name: Joan Potter
Author-Name: John Sturrock
Title: Generational Accounts for the United States:  An Update: Technical Paper 2000-1
Abstract: Although relatively new, generational accounting has been used in 26 countries to evaluate the generational stance of national fiscal policies. Generational accounting calculates the size of prospective net tax burdens and lifetime net tax rates that different generations face under current fiscal policy—information that standard budget presentations do not reveal. This method can also be used to calculate the policy changes required for achieving a generationally balanced and therefore sustainable fiscal policy—one that implies equal lifetime net tax rates on today’s
Creation-Date: 2000-02-01
File-URL: https://www.cbo.gov/sites/default/files/106th-congress-1999-2000/workingpaper/20001_0.pdf
File-Format: Application/pdf
Number: 13339
Classification-JEL:
Handle: RePEc:cbo:wpaper:13339
Template-type: ReDIF-Paper 1.0
Author-Name: Randall P. Mariger
Title: Social Security Privatization:  What Are the Issues?  Technical Paper 1999-8
Abstract: Social Security privatization is now receiving much attention in policy circles. Proposed privatization plans range from modest changes in the mix of assets held by the Social Security trust fund to the phased-in replacement of all Social Security benefits and taxes with mandatory Individual Retirement Accounts (IRAs).
Much of the current interest in privatization stems from the realization that any reform of Social Security that is financially feasible and that maintains the program’s current structure would not be a good deal for current and future
Creation-Date: 1999-08-01
File-URL: https://www.cbo.gov/sites/default/files/106th-congress-1999-2000/workingpaper/19998_0.pdf
File-Format: Application/pdf
Number: 13340
Classification-JEL:
Handle: RePEc:cbo:wpaper:13340
Template-type: ReDIF-Paper 1.0
Author-Name: Robert Arnold
Author-Name: Angelo Mascaro
Author-Name: Matthew Salomon
Title: Draft Framework for Determining the Spreads of Commercial Paper Rates and LIBOR to the Rate on Three Month Treasury Bills and the Volatility of those Interest Rates: Technical Paper 1999-7
Abstract: The Higher Education Amendments of 1998 direct CBO and other organizations to participate in a study group which shall evaluate the spread between each of the 30-day and 90-day commercial paper rates, and the 90-day London Interbank Offered Rate (LIBOR) to the 91-day Treasury bill rate. The study group, chaired by the Comptroller General (GAO) and the Secretary of Education, has asked CBO to present an illustration of its projections of these spreads as well as that between 30-day LIBOR and the 91-day Treasury bill rate. The study group has also asked CBO to present
Creation-Date: 1999-07-01
File-URL: https://www.cbo.gov/sites/default/files/106th-congress-1999-2000/workingpaper/19997_0.pdf
File-Format: Application/pdf
Number: 13341
Classification-JEL:
Handle: RePEc:cbo:wpaper:13341
Template-type: ReDIF-Paper 1.0
Author-Name: Edward N. Gamber
Author-Name: Juann Hung
Title: The Impact of Globalization on the U.S. Business Cycle: Technical Paper 1999-6
Abstract: This paper investigates whether the U.S. has become more globalized and if so whether that increased globalization has helped hold down inflation and prolong the current economic expansion. We find that U.S. globalization, which has been rising significantly over the past four decades, surged beyond its earlier trend in the 1990s. Import prices exert a greater impact on prices of products in industries faced with greater import penetration. High foreign excess capacity accounts for much of the recent decline in U.S. inflation. Finally, the degree of business cycle
Creation-Date: 1999-04-01
File-URL: https://www.cbo.gov/sites/default/files/106th-congress-1999-2000/workingpaper/19996_1.pdf
File-Format: Application/pdf
Number: 13342
Classification-JEL:
Handle: RePEc:cbo:wpaper:13342
Template-type: ReDIF-Paper 1.0
Author-Name: William G. Gale
Author-Name: Evan F. Koenig
Author-Name: Diane Lim Rogers
Author-Name: John Sabelhaus
Title: Taxing Government in a National Retail Sales Tax: Technical Paper 1999-5
Abstract: In recent months, proposals to replace all or most of the existing federal tax system with a national retail sales tax have received increased attention. The most prominent proposals include those by Reps. Dan Schaefer, R-Colo., and Billy Tauzin, R-La., and by a group called Americans for Fair Taxation (AFT). Schaefer-Tauzin (S-T) would replace existing personal and corporate income taxes, the estate tax, and some excise taxes with what they term a 15 percent sales tax. AFT would replace taxes on personal and corporate income, estates, and payrolls with what they term a 23
Creation-Date: 1998-10-01
File-URL: https://www.cbo.gov/sites/default/files/105th-congress-1997-1998/workingpaper/19995_0.pdf
File-Format: Application/pdf
Number: 13343
Classification-JEL:
Handle: RePEc:cbo:wpaper:13343
Template-type: ReDIF-Paper 1.0
Author-Name: Ken Ayotte
Author-Name: John Sabelhaus
Title: The Effect of Tax-Deferred Savings Plans on Household Wealth Accumulation:  Evidence from the Survey of Consumer Finances: Technical Paper 1999-4:
Abstract: Demographic trends and projections of continued slow productivity growth have led to significant concern about the viability of Social Security and Medicare in the next century. In addition to these gloomy predictions about public retirement programs, fundamental changes that are occurring in employer-sponsored pension coverage are also becoming a source of concern. Although the overall level of employer-sponsored retirement plan coverage in the U.S. has remained high during the last few decades, an increasing number of working families are now receiving their primary
Creation-Date: 1998-03-01
File-URL: https://www.cbo.gov/sites/default/files/105th-congress-1997-1998/workingpaper/19994_0.pdf
File-Format: Application/pdf
Number: 13344
Classification-JEL:
Handle: RePEc:cbo:wpaper:13344
Template-type: ReDIF-Paper 1.0
Author-Name: Karen Pence
Author-Name: John Sabelhaus
Title: Household Saving in the '90s:  Evidence from Cross-Section Wealth Surveys: Technical Paper 1999-3
Abstract: This paper uses a series of cross-section wealth surveys to measure how wealth accumulation and active saving rates varied across cohort-groups during the early and mid 1990s. Our estimated rates of saving and wealth change across cohorts show a somewhat more dramatic life cycle pattern than found in previous studies, in part because we use a new technique, and in part because the cross-section wealth surveys we use oversample the wealthiest families whose behavior dominates aggregate changes. Adjusting the wealth-change rates for bequests and subtracting out the capital
Creation-Date: 1999-05-01
File-URL: https://www.cbo.gov/sites/default/files/106th-congress-1999-2000/workingpaper/19993_0.pdf
File-Format: Application/pdf
Number: 13345
Classification-JEL:
Handle: RePEc:cbo:wpaper:13345
Template-type: ReDIF-Paper 1.0
Author-Name: David Altig
Author-Name: Alan J. Auerbach
Author-Name: Laurence J. Kotlikoff
Author-Name: Kent A. Smetters
Title: Simulating U.S. Tax Reform: Technical Paper 1997-6
Abstract: This paper uses a new large-scale dynamic simulation model to compare the equity, efficiency, and macroeconomic effects of five alternatives to the current U.S. federal income tax. These reforms are a proportional income tax, a proportional consumption tax, a flat tax, a flat tax with transition relief, and a progressive variant of the flat tax called the "X tax."

The model incorporates intragenerational heterogeneity and kinked budget constraints. It predicts major macroeconomic gains (including an 11 percent increase in long-run output)
Creation-Date: 1997-09-01
File-URL: https://www.cbo.gov/sites/default/files/105th-congress-1997-1998/workingpaper/19976_0.pdf
File-Format: Application/pdf
Number: 13351
Classification-JEL:
Handle: RePEc:cbo:wpaper:13351
Template-type: ReDIF-Paper 1.0
Author-Name: Ufuk Demiroglu
Author-Name: Matthew Salomon
Title: Using Time-Series Models to Project Output Over the Medium Term: Technical Paper 2002-1
Abstract: This paper examines how multivariate time-series models might be used to project output over the medium term—that is, over a 10-year span. Fairly simple time-series models are known to yield short-term forecasts comparable in accuracy with those of large-scale macroeconometric models. Could the information embodied in projections based on time-series models be informative to the Congressional Budget Office in constructing its own medium-term projections of output?
Creation-Date: 2002-09-01
File-URL: https://www.cbo.gov/sites/default/files/107th-congress-2001-2002/workingpaper/2002-1_0.pdf
File-Format: Application/pdf
Number: 13983
Classification-JEL:
Handle: RePEc:cbo:wpaper:13983
Template-type: ReDIF-Paper 1.0
Author-Name: Laurence J. Kotlikoff
Author-Name: Kent Smetters
Author-Name: Jan Walliser
Title: Privatizing Social Security in the U.S.:  Comparing the Options: Technical Paper 1998-4
Abstract: This paper considers alternative ways to privatize the U.S. Social Security system. It does so using a new rational-expectations simulation model based on the Auerbach and Kotlikoff (1987) model. The new model incorporates intra-as well as intergenerational heterogeneity and is closely calibrated to U.S. fiscal institutions. Three different dimensions of privatization are considered: the choice of the tax used to finance the transition, the degree of voluntary participation in the new retirement system, and the method of making the new system progressive.
Creation-Date: 1998-11-01
File-URL: https://www.cbo.gov/sites/default/files/105th-congress-1997-1998/workingpaper/1998-4_0.pdf
File-Format: Application/pdf
Number: 14078
Classification-JEL:
Handle: RePEc:cbo:wpaper:14078
Template-type: ReDIF-Paper 1.0
Author-Name: Josh O’Harra
Author-Name: John Sabelhaus
Title: Projecting Longitudinal Marriage Patterns for Long-Run Policy Analysis: Technical Paper 2002-2
Abstract: Imagine a longitudinal micro data file that contains individual earnings along with basic demographic variables such as age, sex, education, marital status, and spouse’s characteristics for a representative future sample of the population. Such a data set would be invaluable for analyzing solvency and distributional questions about Social Security and other long-run policy issues, because the longitudinal data file would have all the information needed to tabulate taxes paid and benefits received under any set of program rules. The goal of dynamic micro-simulation modeling
Creation-Date: 2002-10-01
File-URL: https://www.cbo.gov/sites/default/files/107th-congress-2001-2002/workingpaper/2002-2_0.pdf
File-Format: Application/pdf
Number: 14080
Classification-JEL:
Handle: RePEc:cbo:wpaper:14080
Template-type: ReDIF-Paper 1.0
Author-Name: Kevin Perese
Title: Mate Matching for Microsimulation Models: Technical Paper 2002-3
Abstract: In dynamic microsimulation models, the process of determining who marries whom in the annual marriage market has important implications for numerous other processes modeled. There are two broad methodologies used in most microsimulation models to match individuals with each other–a stable marriage algorithm approach or a stochastic framework approach. This paper reviews those two approaches and summarizes the mate-matching techniques used in other dynamic microsimulation models. Building upon the methods used in other models, this paper presents an extension to the
Creation-Date: 2002-11-01
File-URL: https://www.cbo.gov/sites/default/files/107th-congress-2001-2002/workingpaper/2002-3_0.pdf
File-Format: Application/pdf
Number: 14211
Classification-JEL:
Handle: RePEc:cbo:wpaper:14211
Template-type: ReDIF-Paper 1.0
Author-Name: Shinichi Nishiyama
Author-Name: Kent Smetters
Title: Ricardian Equivalence with Incomplete Household Risk Sharing: Technical Paper 2002-4
Abstract: Several important empirical studies (for example, Altonji, Hayashi, and Kotlikoff, 1992, 1996, 1997) have found that households are not altruistically linked in a way consistent with the standard Ricardian model, as put forward by Barro (1974). We built a two-sided altruistic-linkage model in which private transfers are made in the presence of two types of shocks: an observable shock that is public information (for example, public redistribution) and an unobservable shock that is private information (for example, idiosyncratic wages). Parents and children observe each other
Creation-Date: 2002-11-02
File-URL: https://www.cbo.gov/sites/default/files/107th-congress-2001-2002/workingpaper/2002-4_0.pdf
File-Format: Application/pdf
Number: 14222
Classification-JEL:
Handle: RePEc:cbo:wpaper:14222
Template-type: ReDIF-Paper 1.0
Author-Name: Charles Bronowski
Author-Name: Juann H. Hung
Title: Modeling the U.S. Current Account as the Savings-Investment Balance: Technical Paper 2002-5
Abstract: This paper derives and estimates a current account model from the perspective that the current account balance is the difference between national savings and investment. This approach allows us to include determinants of savings, investment, and capital flows to explain and forecast the evolution of the current account, an advantage not offered by the elasticity approach, which views the current account balance as the sum of net exports and net investment income. The savings-investment approach shows that the three traditional variables the real exchange rate, domestic
Creation-Date: 2002-12-01
File-URL: https://www.cbo.gov/sites/default/files/107th-congress-2001-2002/workingpaper/2002-5_0.pdf
File-Format: Application/pdf
Number: 14224
Classification-JEL:
Handle: RePEc:cbo:wpaper:14224
Template-type: ReDIF-Paper 1.0
Author-Name: Shinichi Nishiyama
Author-Name: Kent Smetters
Title: Consumption Taxes and Economic Efficiency in a Stochastic OLG Economy: Technical Paper 2002-6
Abstract: Fundamental tax reform is examined in a heterogeneous overlapping-generations life-cycle model in which agents face idiosyncratic earnings shocks and uncertain life spans. Following Auerbach and Kotlikoff (1987), a lump-sum redistribution authority is used to examine efficiency gains over the transition path. A progressive income tax is replaced with a flat consumption tax (for example, a value-added tax or a national retail sales tax). If shocks are insurable (that is, no risk), this reform improves (interim) efficiency, a result consistent with the previous literature.
Creation-Date: 2002-12-02
File-URL: https://www.cbo.gov/sites/default/files/107th-congress-2001-2002/workingpaper/2002-6_0.pdf
File-Format: Application/pdf
Number: 14229
Classification-JEL:
Handle: RePEc:cbo:wpaper:14229
Template-type: ReDIF-Paper 1.0
Author-Name: Benjamin R. Page
Title: Testing for a Bequest Motive Using Cross-State Variation in Bequest Taxes: Technical Paper 2003-01
Abstract: There are two broad categories of explanations for why people leave bequests. Bequests may be intentional, for a variety of reasons including altruism, "joy of giving," or strategic considerations. Or they may simply be accidental, because people hold wealth for various reasons and life spans are uncertain. This paper attempts to determine whether bequests are intentional or accidental by looking at the effect of state bequest taxes (estate or inheritance taxes) on the giving of gifts while people are alive. If bequests are accidental, bequest taxes
Creation-Date: 2003-04-01
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2003-1_0.pdf
File-Format: Application/pdf
Number: 14362
Classification-JEL:
Handle: RePEc:cbo:wpaper:14362
Template-type: ReDIF-Paper 1.0
Author-Name: Amy Rehder Harris
Author-Name: John Sabelhaus
Title: Projecting Longitudinal Earnings Patterns for Long-Run Policy Analysis: Technical Paper 2003-02
Abstract: This paper presents a method for projecting person-level labor force participation and earnings for the U.S. population in a dynamic micro-simulation setting. A dynamic micro-simulation model starts with economic and demographic data for a current sample of the population, then stochastically "ages" that sample forward through time, ultimately generating a longitudinal micro data file, which is useful for studying Social Security and other long-term issues. The stochastic projections described here proceed in four steps: in each year, every person is sequentially
Creation-Date: 2003-04-02
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2003-2_0.pdf
File-Format: Application/pdf
Number: 14364
Classification-JEL:
Handle: RePEc:cbo:wpaper:14364
Template-type: ReDIF-Paper 1.0
Author-Name: Mark Lasky
Title: The Economic Costs of Reducing Emissions of Greenhouse Gases: A Survey of Economic Models: Technical Paper 2003-03
Abstract: In response to fears about the damages global warming may cause in the future, most of the world’s nations signed the Kyoto Protocol in December 1997, agreeing to cap human-induced emissions of carbon dioxide and other human-induced greenhouse gases in the United States and 37 other industrial nations beginning in 2008. At that time, they left many details unresolved. Since then, the Bush Administration has indicated it would not submit the protocol to the Senate for ratification, and the other parties have agreed to rules for implementation that will likely result in a
Creation-Date: 2003-05-01
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2003-3_0.pdf
File-Format: Application/pdf
Number: 14414
Classification-JEL:
Handle: RePEc:cbo:wpaper:14414
Template-type: ReDIF-Paper 1.0
Author-Name: Robert W. Arnold
Title: Modeling Long-Run Economic Growth: Technical Paper 2003-04
Abstract: This paper reviews the recent empirical literature on long-run growth to determine what factors influence growth in total factor productivity (TFP) and whether there are any channels of influence that should be added to standard models of long-run growth. Factors affecting productivity fall into three general categories: physical capital, human capital, and innovation (including other factors that might influence TFP growth). Recent empirical evidence provides little support for the idea that there are extra-normal returns to physical capital accumulation, nor is there
Creation-Date: 2003-06-01
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2003-4_0.pdf
File-Format: Application/pdf
Number: 14497
Classification-JEL:
Handle: RePEc:cbo:wpaper:14497
Template-type: ReDIF-Paper 1.0
Author-Name: Juann Hung
Author-Name: Matt Salomon
Author-Name: Stacia Sowerby
Title: International Trade and U.S. Productivity: Technical Paper 2003-05
Abstract: This paper examines the effect of international trade on U.S. productivity. We argue that trade can affect domestic productivity through economies-of-scale effects, competition effects, reallocation effects, and spillover effects. We then estimate the net impact of these effects. The results of both panel and time-series regressions of manufacturing data indicate that (1) a decrease in the import price has a positive competition effect on manufacturing productivity growth after one to two years, and this impact is bigger when import penetration is bigger; and (2) exporting
Creation-Date: 2003-06-02
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2003-5_0.pdf
File-Format: Application/pdf
Number: 14567
Classification-JEL:
Handle: RePEc:cbo:wpaper:14567
Template-type: ReDIF-Paper 1.0
Author-Name: Charles A. Capone, Jr.
Title: The FHA Budget Subsidy Simulation System: A Dynamic Simulation Model of Budget Outcomes for FHA Single-Family Mortgage Insurance: Technical Paper 2003-07
Abstract: This paper introduces a dynamic simulation model of value to the government from FHA single-family mortgage insurance. The model, known as the FHA Budget Subsidy Simulation System (FHA-BSSS), was built at CBO as a tool for analyzing the sensitivity to economic fluctuations of net receipts from or outlays to FHA, and how that sensitivity could be used to inform initial budget estimates and ongoing re-estimates.
The FHA-BSSS is a software system that utilizes loan-record databases and econometric models to forecast FHA cash flows and resulting budget
Creation-Date: 2003-07-01
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2003-7_0.pdf
File-Format: Application/pdf
Number: 14635
Classification-JEL:
Handle: RePEc:cbo:wpaper:14635
Template-type: ReDIF-Paper 1.0
Author-Name: Albert D. Metz
Title: Forecasting Deposit Growth: Forecasting BIF and SAIF Assessable and Insured Deposits: Technical Paper 2003-06
Abstract: This paper develops a new method of forecasting growth in the deposits of financial institutions for use by the Congressional Budget Office (CBO) in projecting receipts and expenditures of the Federal Deposit Insurance Corporation (FDIC). Below I present an approach to forecasting the various deposit categories and include an example of out-of-sample forecasting performance. I briefly discuss the limitations of the approach and the results of some alternatives, including issues of regime change and cointegration. In the end, I propose a simple linear regression relating
Creation-Date: 2003-07-01
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2003-6_0.pdf
File-Format: Application/pdf
Number: 14636
Classification-JEL:
Handle: RePEc:cbo:wpaper:14636
Template-type: ReDIF-Paper 1.0
Author-Name: John Sabelhaus
Author-Name: Joel V. Smith
Title: Alternative Methods for Projecting Equity Returns: Implications for Evaluating Social Security Reform Proposals: Technical Paper 2003-08
Abstract: The effect upon future Social Security benefits resulting from the introduction of individual accounts depends on both the potential risks and returns of private equities, yet the historical evidence about determinants of stock market risks and returns is mixed. In particular, correlations between equity returns and market fundamentals (such as the dividend price ratio) are weak at annual frequencies, which has led some to conclude that a random returns (fixed mean and variance) model is the preferred specification for simulating the future path of equity returns. Although
Creation-Date: 2003-08-01
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2003-8_0.pdf
File-Format: Application/pdf
Number: 14678
Classification-JEL:
Handle: RePEc:cbo:wpaper:14678
Template-type: ReDIF-Paper 1.0
Author-Name: Mark Lasky
Title: A Putty-Clay Model of Business Fixed Investment: Technical Paper 2003-09
Abstract: In this paper, I specify and estimate a model of investment using ex post fixed proportions, or putty-clay capital, for five categories of business fixed investment. The specification of expectations causes investment to depend on growth in output less growth in total factor productivity (TFP) and on labor productivity times growth in labor hours at full employment. Thus, demographics can play an important role in investment. TFP at full employment is estimated using a Kalman filter to determine the level that would satisfy an Okun’s Law relationship exactly. Labor and
Creation-Date: 2003-09-01
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2003-9_0.pdf
File-Format: Application/pdf
Number: 14770
Classification-JEL:
Handle: RePEc:cbo:wpaper:14770
Template-type: ReDIF-Paper 1.0
Author-Name: Angelo Mascaro
Title: Using the Treasury Nominal and Inflation-Indexed Spread to Estimate Expected Long-Run Changes in the CPI-U under Inflation Uncertainty, Risk Aversion, and the Probability of Deflation: Technical Paper 2003-10
Abstract: Yield spreads between rates on Treasury nominal and inflation-indexed securities are thought to be distorted measures of expected inflation because of various biases. Three sources of bias are investigated in this paper: risk aversion, inflation uncertainty, and failure to account for the explicit option on the redemption value of the Treasury’s inflation-indexed security when there is a probability of deflation. The analysis produces estimates of all three biases. It finds that significant bias could arise from the second and third sources, while any bias from the first
Creation-Date: 2003-11-01
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2003-10_0.pdf
File-Format: Application/pdf
Number: 14933
Classification-JEL:
Handle: RePEc:cbo:wpaper:14933
Template-type: ReDIF-Paper 1.0
Author-Name: Shinichi Nishiyama
Title: Analyzing Tax Policy Changes Using a Stochastic OLG Model with Heterogeneous Households: Technical Paper 2003-12
Abstract: This paper describes a stochastic overlapping generations (OLG) model with heterogeneous agents, which is one of five models used at the Congressional Budget Office for recent fiscal policy analyses. In this model economy, households are heterogeneous with respect to their age, wealth holding, working ability, and working history, and households face individual shocks to their ability to earn income every year. The paper also explains the choice of parameters, the characteristics of the baseline economy, and the features of the model through policy experiments under several
Creation-Date: 2003-12-01
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2003-12_0.pdf
File-Format: Application/pdf
Number: 15112
Classification-JEL:
Handle: RePEc:cbo:wpaper:15112
Template-type: ReDIF-Paper 1.0
Author-Name: Peter Debaere
Author-Name: Ufuk Demiroglu
Title: Factor Accumulation Without Diminishing Returns: The Case of East Asia: Technical Paper 2003-11
Abstract: We investigate the similarity of the country endowments of the newly industrialized East Asian countries and their major developed trading partners since the 1960s. In particular, we analyze their factor endowments in years 1965, 1977 and 1990, using the lens condition of Deardorff (1994). Because of the similarity of endowments of the NICs and their developed-country trading partners, we cannot reject the hypothesis that these countries were able to produce the same set of goods since the 1960s. This empirical evidence supports the theoretical analyses of the East Asian
Creation-Date: 2003-12-01
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2003-11_0.pdf
File-Format: Application/pdf
Number: 15113
Classification-JEL:
Handle: RePEc:cbo:wpaper:15113
Template-type: ReDIF-Paper 1.0
Author-Name: Josh O’Harra
Author-Name: John Sabelhaus
Author-Name: Michael Simpson
Title: Overview of the Congressional Budget Office Long-Term (CBOLT) Policy Simulation Model: Technical Paper 2004-01
Abstract: The Congressional Budget Office Long-Term (CBOLT) policy simulation model was developed to answer budgetary and distributional questions about Social Security, Medicare, and other long-term policy issues. CBOLT has three distinct solution modes for making projections: static simulations with a fixed macro environment and actuarial projection modules like those used by the Social Security Administration (SSA) and Center for Medicare and Medicaid Studies (CMS); a macro growth model environment with SSA/CMS-style actuarial projection modules; and an integrated micro/macro
Creation-Date: 2004-01-01
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2004-01_0.pdf
File-Format: Application/pdf
Number: 15188
Classification-JEL:
Handle: RePEc:cbo:wpaper:15188
Template-type: ReDIF-Paper 1.0
Author-Name: John Sabelhaus
Author-Name: Michael Simpson
Author-Name: Julie Topoleski
Title: Incorporating Longevity Effects into Long-Term Medicare Projections: Technical Paper 2004-02
Abstract: The cost of the Medicare program will increase dramatically as the baby boom generation reaches retirement. Results from the Congressional Budget Office Long-Term Model (CBOLT) indicate that Medicare costs will equal more than 9 percent of GDP by 2078. This paper considers the impact of replacing the Centers for Medicare and Medicaid Services approach of using an age- and sex-based model with one that is also based on age and sex but adds time until death to the forecasting model. Other researchers have found that using only age and sex can significantly overstate future
Creation-Date: 2004-01-02
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2004-2_0.pdf
File-Format: Application/pdf
Number: 15190
Classification-JEL:
Handle: RePEc:cbo:wpaper:15190
Template-type: ReDIF-Paper 1.0
Author-Name: Shinichi Nishiyama
Title: Analyzing an Aging Population--A Dynamic General Equilibrium Approach: Technical Paper 2004-03
Abstract: This paper shows the macroeconomic and welfare implications of an aging population in the United States, using an overlapping-generations model with heterogeneous households. The model uses three population projections in Social Security Administration (2003), and generates economies as equilibrium transition paths from 1961 to 2200. The paper demonstrates how several different population projections and government financing assumptions—to make the Social Security system sustainable—affect households’ decisions and welfare. One of the policy experiments shows that an
Creation-Date: 2004-02-01
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2004-3_0.pdf
File-Format: Application/pdf
Number: 15191
Classification-JEL:
Handle: RePEc:cbo:wpaper:15191
Template-type: ReDIF-Paper 1.0
Author-Name: Mark Lasky
Title: The Role of Saving in Economic Growth When the Cost of New Human Capital Depends on the Cost of Labor: Technical Paper 2004-04
Abstract: Mankiw, Romer and Weil (1992) found that modifying the Solow growth model to include human capital substantially increases the impact on output of a change in the saving rate for physical capital because increased output induces greater investment in human capital. However, that conclusion rests on the assumption that the cost of new human capital is proportional to the price of output. If, instead, the cost of new human capital is proportional to the cost of labor, and thus proportional to labor productivity, the effect on output of a change in the saving rate for physical
Creation-Date: 2004-02-02
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2004-4_0.pdf
File-Format: Application/pdf
Number: 15277
Classification-JEL:
Handle: RePEc:cbo:wpaper:15277
Template-type: ReDIF-Paper 1.0
Author-Name: Angelo Mascaro
Title: Using the Natural Rate Concept to Assess the Consistency of Projections Ten Years Ahead for Real Interest Rates and Inflation: Technical Paper 2004-05
Abstract: The concept of the "natural" long-term interest rate, a rate that is determined by the underlying production capability of the economy, provides a way to check the internal consistency of medium-term economic projections. Forecasters who use a neoclassical growth model to project the level of real Gross Domestic Product, as does the Congressional Budget Office, are implicitly projecting the natural rate, because the growth model simulates the production capability of the economy. The assumptions that are embedded in the growth model can be used to
Creation-Date: 2004-03-29
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2004-5_0.pdf
File-Format: Application/pdf
Number: 15469
Classification-JEL:
Handle: RePEc:cbo:wpaper:15469
Template-type: ReDIF-Paper 1.0
Author-Name: Robert Arnold
Author-Name: Ufuk Demiroglu
Author-Name: Robert Dennis
Author-Name: Tracy Foertsch
Title: Macroeconomic Analysis of a 10 Percent Cut in Income Tax Rates: Technical Paper 2004-07
Abstract: This paper explores the effects of a simple policy change—a 10 percent tax cut—to shed light on the different models CBO uses to examine the macroeconomic effects of policy changes. Most of the models predict that such a simple tax cut will increase GDP and therefore that the revenue loss from the tax cut will be smaller than the conventional estimate predicts over the first 10 years. None of the models predict that as much as 25 percent of the conventional cost could be offset, however.
This paper is an expanded version of a paper presented at the
Creation-Date: 2004-05-01
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2004-07_0.pdf
File-Format: Application/pdf
Number: 15668
Classification-JEL:
Handle: RePEc:cbo:wpaper:15668
Template-type: ReDIF-Paper 1.0
Author-Name: Robert McClelland
Title: Charitable Bequests and the Repeal of the Estate Tax: Technical Paper 2004-08
Abstract: Recent years have seen tremendous changes in tax law. For example, the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA 2001) phases out the estate tax over 10 years until it is fully repealed in 2010. Those changes reduce federal revenues but also alter various incentives. For example, the deductibility of charitable bequests from one’s taxable estate provides an incentive to make these bequests so that eliminating the estate tax would eliminate this incentive.
Recently, two important articles have presented substantially different
Creation-Date: 2004-07-01
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2004-8_0.pdf
File-Format: Application/pdf
Number: 15799
Classification-JEL:
Handle: RePEc:cbo:wpaper:15799
Template-type: ReDIF-Paper 1.0
Author-Name: Sven H. Sinclair
Author-Name: Kent A. Smetters
Title: Health Shocks and the Demand for Annuities: Technical Paper 2004-09
Abstract: A new explanation is offered for the thin private market for individual annuities in the United States. Individuals face a risk of health shocks which simultaneously cause large uninsured expenses and shorten the life expectancy. The value of a life annuity then decreases at the same time as the need for cash increases, undermining its effectiveness in providing financial security. When the risk of such health shocks is substantial, it is no longer optimal for risk-averse individuals with uncertain life spans to hold all of their wealth in life annuity form, even if annuity
Creation-Date: 2004-07-02
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2004-09_0.pdf
File-Format: Application/pdf
Number: 15868
Classification-JEL:
Handle: RePEc:cbo:wpaper:15868
Template-type: ReDIF-Paper 1.0
Author-Name: Ufuk Demiroglu
Title: Large Foreign Markets and Export-Led Growth in Developing Countries: Technical Paper 2004-10
Abstract: Many economists and policymakers believe that international trade played an important role in the economic growth miracles of East Asia, but there is no consensus on the precise way trade helped. However, narrative accounts give the impression that an eminent feature of the growth miracles was a move toward producing goods that higher-income countries produced, adopting the better technologies and methods used in those countries. Those goods were not always demanded much in the domestic markets of the newly industrializing East Asian countries, because of lower aggregate
Creation-Date: 2004-08-01
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2004-10_0.pdf
File-Format: Application/pdf
Number: 15896
Classification-JEL:
Handle: RePEc:cbo:wpaper:15896
Template-type: ReDIF-Paper 1.0
Author-Name: Tracy Foertsch
Title: Macroeconomic Impacts of Stylized Tax Cuts in an Intertemporal Computable General Equilibrium Model: Technical Paper 2004-11
Abstract: What are the consequences of stylized cuts in federal personal income tax rates when applying alternative options for financing changes in fiscal policy? This analysis uses an intertemporal computable general equilibrium (CGE) model, with the Ramsey optimal-growth framework at its core, to explore the answer to this question. One such financing option pays for cuts in marginal income tax rates by adjusting government spending, the other by adjusting future taxes. Both equate a primary deficit with net government interest payments, so that the ratio of government debt to
Creation-Date: 2004-08-03
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2004-11_0.pdf
File-Format: Application/pdf
Number: 15914
Classification-JEL:
Handle: RePEc:cbo:wpaper:15914
Template-type: ReDIF-Paper 1.0
Author-Name: Deborah Lucas
Author-Name: Marvin Phaup
Author-Name: Ravi Prasad
Title: Valuing Federal Loans and Loan Guarantees Using Options-Pricing Methods: Technical Paper 2004-12
Abstract: This paper provides more detail about the methods used in the Congressional Budget Office (CBO) study, "Estimating Subsidies for Federal Loans and Guarantees," (August 2004). That study estimates the market value of loans and loan guarantees under both credit reform and risk-adjusted approaches. The purpose of this paper is to increase the transparency of those methods for analysts who may wish to adopt them. Although this paper includes a brief overview of the basics, it is not a substitute for a textbook on options pricing. Rather, the discussion
Creation-Date: 2004-08-04
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2004-12_0.pdf
File-Format: Application/pdf
Number: 15937
Classification-JEL:
Handle: RePEc:cbo:wpaper:15937
Template-type: ReDIF-Paper 1.0
Author-Name: Julie Topoleski
Title: Uncertainty About Projections of Medicare Cost Growth: Technical Paper 2004-13
Abstract: Over the next several decades, Medicare costs are going to increase significantly. Previous analysis has looked at the potential range of costs using a deterministic, scenario-based analysis. This provides a range of potential outcomes but provides no information as to the likelihood of these outcomes. The analysis here systematically considers the uncertainty inherent in forecasting Medicare costs using a Monte Carlo approach that reflects both the uncertainty in forecasting health costs and the uncertainty association with economic and demographic projections. Within 100
Creation-Date: 2004-08-05
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2004-13_0.pdf
File-Format: Application/pdf
Number: 15942
Classification-JEL:
Handle: RePEc:cbo:wpaper:15942
Template-type: ReDIF-Paper 1.0
Author-Name: Jangryoul Kim
Author-Name: Preston Miller
Author-Name: Larry Ozanne
Title: Estimating and Forecasting Capital Gains with Quarterly Models: Technical Paper 2004-14
Abstract: At the end of each year, the Congressional Budget Office (CBO) estimates capital gains for the year ending and forecasts them for the next decade. The decade forecast is made using CBO’s forecast of GDP and an assumption that gains revert from their current size to their historical size relative to GDP. Our objective in this paper is to describe methods to improve CBO’s forecasts, particularly for the first year ahead.
We settled on two procedures. The first is similar to CBO’s method for forecasting gains. It uses an equation to forecast gains given
Creation-Date: 2004-09-01
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2004-14_0.pdf
File-Format: Application/pdf
Number: 16003
Classification-JEL:
Handle: RePEc:cbo:wpaper:16003
Template-type: ReDIF-Paper 1.0
Author-Name: Paul Burnham
Title: A Model to Project Flows into and out of Tax-Deferred Retirement Savings Accounts: Technical Paper 2004-15
Abstract: This paper provides the complete specification of a model to project contributions to, investment earnings of, and distributions from tax-deferred retirement savings accounts. The model is used to project taxable pension distributions and IRA withdrawals for the Congressional Budget Office’s (CBO’s) 10-year baseline. A 75-year version of the model was also used to produce the estimates for the CBO Paper "Tax-Deferred Retirement Savings in Long-Term Revenue Projections." The model is presented in two parts: one covering individual retirement accounts and
Creation-Date: 2004-10-01
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2004-15_0.pdf
File-Format: Application/pdf
Number: 16110
Classification-JEL:
Handle: RePEc:cbo:wpaper:16110
Template-type: ReDIF-Paper 1.0
Author-Name: Seth H. Giertz
Title: Recent Literature on Taxable-Income Elasticities: Technical Paper 2004-16
Abstract: This paper reviews the literature on taxable-income elasticities, focusing primarily on empirical studies examining the U.S. tax changes of 1981, 1986, 1990, and 1993 and the bracket creep of the late 1970s and early 1980s. The paper first provides background on the importance of the elasticity of taxable income both for forecasting income tax revenue and for assessing the efficiency implications of tax rate changes. It then discusses the major methodological issues and obstacles before delving into the literature. The paper emphasizes the different methodologies employed
Creation-Date: 2004-12-01
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2004-16_0.pdf
File-Format: Application/pdf
Number: 16189
Classification-JEL:
Handle: RePEc:cbo:wpaper:16189
Template-type: ReDIF-Paper 1.0
Author-Name: Juann H. Hung
Author-Name: Angelo Mascaro
Title: Return on Cross-Border Investment: Why Does U.S. Investment Abroad Do Better? Technical Paper 2004-17
Abstract: Despite the large size of U.S. net financial obligations to foreigners, U. S. residents have continued to earn more income on their assets abroad than foreigners have on their assets in the United States. In other words, the rate of return on U.S.-owned assets abroad is still higher than the rate of return on foreign-owned assets in the United States. The advantageous return gap for U.S. investment has reflected the much greater return on U.S. direct investments abroad than that on foreign direct investments in the United States.
We investigate the
Creation-Date: 2004-12-02
File-URL: https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/workingpaper/2004-17_0.pdf
File-Format: Application/pdf
Number: 16204
Classification-JEL:
Handle: RePEc:cbo:wpaper:16204
Template-type: ReDIF-Paper 1.0
Author-Name: Seth H. Giertz
Title: A Sensitivity Analysis of the Elasticity of Taxable Income: Working Paper 2005-01
Abstract: This paper applies the methods of Gruber and Saez (2002) to a panel of tax returns spanning 1979 through 2001 in order to examine the sensitivity of the elasticities of taxable and broad income to an array of factors. The paper finds that that Gruber and Saez’s approach yields an estimated elasticity of taxable income (ETI) for the 1990s that is about half the size of this paper’s corresponding estimate for the 1980s. In general, the addition of demographic information has little impact on elasticity estimates for the 1980s, but lowers the 1990s estimates, especially for
Creation-Date: 2005-02-01
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/wp-2005-01_0.pdf
File-Format: Application/pdf
Number: 16237
Classification-JEL:
Handle: RePEc:cbo:wpaper:16237
Template-type: ReDIF-Paper 1.0
Author-Name: Eva de Francisco
Title: Limited Participation, Income Distribution and Capital-Account Liberalization: Working Paper 2005-02
Abstract: In the late 1980s and the early 1990s, many nations began implementing a wave of economic reforms. Among those reforms was capital-account liberalization. As a result, international financial markets are substantially more active today than 20 years ago, although there are still many countries with various sorts of capital controls. Economic theory predicts that a complete opening of all financial markets should be welfare-improving; intertemporal consumption smoothing, consumption insurance, and better allocation of investment across countries would presumably all
Creation-Date: 2005-03-01
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2005-02_0.pdf
File-Format: Application/pdf
Number: 16302
Classification-JEL:
Handle: RePEc:cbo:wpaper:16302
Template-type: ReDIF-Paper 1.0
Author-Name: Larry Ozanne
Title: Testing Alternative Methods for Forecasting Capital Gains: Working Paper 2005-03
Abstract: The Congressional Budget Office (CBO) forecasts capital gains as part of its start-of-the-year budget outlook. Jan Kim and Preston Miller in a recent paper with Larry Ozanne (KMO) developed two models that forecast gains for the year ahead more accurately than CBO’s existing method. The models were developed with data as revised through 2002, and gains were forecast recursively for the years 1971-2000 (tax changes and their effects were not forecast). This paper tests one of their models further by using data actually available to CBO at the time of its annual forecasts and
Creation-Date: 2005-03-02
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2004work8_0.pdf
File-Format: Application/pdf
Number: 16308
Classification-JEL:
Handle: RePEc:cbo:wpaper:16308
Template-type: ReDIF-Paper 1.0
Author-Name: Shinichi Nishiyama
Author-Name: Kent Smetters
Title: Does Social Security Privatization Produce Efficiency Gains? Working Paper 2005-04
Abstract: The economic literature shows that privatizing Social Security can improve labor supply incentives, but it can also reduce risk sharing when households face uninsurable risks. We simulate a stylized 50-percent privatization with transaction costs financed by consumption taxes and examined its impact on macroeconomic variables as well as on the welfare across generations and income classes. Our overlapping-generations model includes heterogeneous agents with elastic labor supply who face idiosyncratic earnings shocks and longevity uncertainty. The transition path is
Creation-Date: 2005-04-01
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2005-04_0.pdf
File-Format: Application/pdf
Number: 16442
Classification-JEL:
Handle: RePEc:cbo:wpaper:16442
Template-type: ReDIF-Paper 1.0
Author-Name: Amy Rehder Harris
Author-Name: John Sabelhaus
Title: How Does Differential Mortality Affect Social Security Finances and Progressivity? Working Paper 2005-05
Abstract: The Congressional Budget Office Long-Term (CBOLT) model uses dynamic micro-simulation for a representative sample of the population to analyze the aggregate and distributional effects of Social Security policy. In the model, overall mortality rates by age and sex are calibrated to match Social Security Trustees projections, and differential mortality (the difference in death rates across socioeconomic groups) is introduced using a combination of disability-specific mortality and a technique for the non-disabled developed by Lillard and Panis (1999). In this paper, the
Creation-Date: 2005-05-01
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2005-05_0.pdf
File-Format: Application/pdf
Number: 16493
Classification-JEL:
Handle: RePEc:cbo:wpaper:16493
Template-type: ReDIF-Paper 1.0
Author-Name: Amy Rehder Harris
Author-Name: John Sabelhaus
Author-Name: Almudena Sevilla-Sanz
Title: Behavioral Effects of Social Security Reform in a Dynamic Micro-Simulation with Life-Cycle Agents: Working Paper 2005-06
Abstract: The Congressional Budget Office Long-Term (CBOLT) model uses dynamic micro-simulation to analyze Social Security policy. The version of CBOLT currently being used to analyze policy for the Congress incorporates micro behavioral effects insofar as agents alter their timing of initial claiming of Old Age Insurance (OAI) worker benefits when benefits change, and that has a direct impact on government outlays and a feedback on the macro economy through changes in labor supply. However, the change in benefit claim age is only one of three behavioral responses that could be
Creation-Date: 2005-05-02
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2005-06_0.pdf
File-Format: Application/pdf
Number: 16494
Classification-JEL:
Handle: RePEc:cbo:wpaper:16494
Template-type: ReDIF-Paper 1.0
Author-Name: Almudena Sevilla-Sanz
Title: Social Effects, Household Time Allocation, and the Decline in Union Formation: Working Paper 2005-07
Abstract: Economic theories of the household and the marriage market provide potential explanations for differences in household formation rates over time based in part on the evolution of female wages. However, cross-country differences in female market human capital are unlikely to account for the current differences in union formation rates across developed countries.
I develop a partial equilibrium model that formally incorporates social effects on a woman's decision to enter a household. Social effects are modeled as gender roles that constrain potential
Creation-Date: 2005-05-03
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2005-07_0.pdf
File-Format: Application/pdf
Number: 16517
Classification-JEL:
Handle: RePEc:cbo:wpaper:16517
Template-type: ReDIF-Paper 1.0
Author-Name: Mark Lasky
Title: Putty-Clay Capital and an Index of Capital per Hour: Working Paper 2005-08
Abstract: This paper presents an index of capital per hour constructed using the assumption of putty-clay capital. That index is based on an aggregate putty-clay production function that both preserves the desirable empirical properties of putty-clay models and yields a closed-form solution for aggregate investment as a function of aggregate variables. The key to the production function is an index of capital per hour that is a logarithmic average of the ratios of capital to labor embodied in each unit of capital. That index separates out the capital-deepening portion of investment (
Creation-Date: 2005-06-01
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2005-08_0.pdf
File-Format: Application/pdf
Number: 16575
Classification-JEL:
Handle: RePEc:cbo:wpaper:16575
Template-type: ReDIF-Paper 1.0
Author-Name: Naomi N. Griffin
Title: Labor Adjustment, Productivity and Output Volatility: An Evaluation of Japan's Employment Adjustment Subsidy: Working Paper 2005-10
Abstract: This paper provides a theoretical examination of the impact of Japan’s Employment Adjustment Subsidy, a major employment insurance policy since 1975, on labor adjustment, productivity and output fluctuations in the iron and steel sector. A partial equilibrium industry model with heterogeneous establishments and aggregate uncertainty shows that the EAS reduces steady-state labor productivity by encouraging labor hoarding, while reducing job flows and increasing average firm-level employment. While the directly measured impact on productivity is proportional to the fraction
Creation-Date: 2005-12-02
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2005-10_0.pdf
File-Format: Application/pdf
Number: 17567
Classification-JEL:
Handle: RePEc:cbo:wpaper:17567
Template-type: ReDIF-Paper 1.0
Author-Name: Kyoo-il Kim
Author-Name: José Carlos Rodríguez-Pueblita
Title: Are Married Women Secondary Workers? The Evolution of Married Women's Labor Supply in the U.S. from 1983 to 2000: Working Paper 2005-11
Abstract: Applying several estimation procedures to the Panel Study of Income Dynamics, we find that labor supply elasticities with respect to own wages and to other household members’ income for married white women have decreased significantly in absolute terms during the 1983-2000 period. The elasticities with respect to after-tax wages are statistically either not different from zero or negative, while the elasticities with respect to other household members’ income are negative, significant, and relatively stable for much of the period. Our results are robust and consistent
Creation-Date: 2005-12-03
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2005-11_0.pdf
File-Format: Application/pdf
Number: 17570
Classification-JEL:
Handle: RePEc:cbo:wpaper:17570
Template-type: ReDIF-Paper 1.0
Author-Name: Marina Azzimonti
Author-Name: Eva de Francisco
Author-Name: Per Krusell
Title: Median-voter Equilibria in the Neoclassical Growth Model under Aggregation: Working Paper 2005-09
Abstract: We study a dynamic version of Meltzer and Richard’s median-voter model where agents differ in initial wealth. Taxes are proportional to total income, and they are redistributed as equal lump-sum transfers. Voting takes place every period and each consumer votes for the current tax rate that maximizes his or her welfare. We characterize time-consistent (differentiable) Markov-perfect equilibria in three ways. First, by restricting the class of utility functions, we show that independently of the number of wealth types, the economy’s aggregate state can be summarized by two
Creation-Date: 2005-12-01
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2005-09_0.pdf
File-Format: Application/pdf
Number: 17577
Classification-JEL:
Handle: RePEc:cbo:wpaper:17577
Template-type: ReDIF-Paper 1.0
Author-Name: Maria I. Marika Santoro
Title: Early Announcement of a Public Pension Reform in Italy: Working Paper 2006-01
Abstract: There has been much discussion about the need for public pension reforms in most of the Organization for Economic Cooperation and Development (OECD) countries, but what is the macroeconomic impact of announcing reforms in advance? The Italian pension system reform in 1992 represents an illustrative case to address this question. The Italian government announced the pension system reform with the aim of slowing the growth of the system’s expenditures by raising the eligibility retirement age. The present paper develops an overlapping generations (OLG) model, with endogenous
Creation-Date: 2006-01-01
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2006-01_0.pdf
File-Format: Application/pdf
Number: 17588
Classification-JEL:
Handle: RePEc:cbo:wpaper:17588
Template-type: ReDIF-Paper 1.0
Author-Name: Naomi N. Griffin
Author-Name: Kazuhiko Odaki
Title: Reallocation and Productivity Growth in Japan: Revisiting the Lost Decade of the 1990s: Working Paper 2006-02
Abstract: Hayashi and Prescott (2002) argue that the so-called lost decade of the 1990s in Japan is explained by the slowdown in exogenous total factor productivity (TFP) growth rates. At the same time, some have suggested that Japanese banks’ support for inefficient firms prolonged recession, by reducing productivity through misallocation of resources and interference with entry and exit mechanisms. Using firm-level data between 1969 and 1996, this paper investigates the micro-reallocation mechanisms to disentangle the factors behind the slowdown in productivity growth during the
Creation-Date: 2006-01-02
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2006-02_0.pdf
File-Format: Application/pdf
Number: 17603
Classification-JEL:
Handle: RePEc:cbo:wpaper:17603
Template-type: ReDIF-Paper 1.0
Author-Name: Seth H. Giertz
Title: The Elasticity of Taxable Income During the 1990s: A Sensitivity Analysis: Working Paper 2006-03
Abstract: This paper examines alternative methodologies for measuring responses to the 1990 and 1993 federal tax increases. The methodologies build on those employed by Gruber and Saez (2002), Carroll (1998), and Auten and Carroll (1999). Internal Revenue Service tax return data for the project are from the Statistics of Income, which heavily oversamples high-income filers. Special attention is paid to the importance of sample income restrictions and methodology. Estimates are broken down by income group to measure how responses to tax changes vary by income. In general, estimates
Creation-Date: 2006-02-02
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2006-03_0.pdf
File-Format: Application/pdf
Number: 17611
Classification-JEL:
Handle: RePEc:cbo:wpaper:17611
Template-type: ReDIF-Paper 1.0
Author-Name: Paul Burnham
Title: A Steady-State Analysis of Proposals to Reduce the Tax on Saving: Working Paper 2006-04
Abstract: This paper sets forth a stylized model for estimating the "steady-state" revenue effects of tax proposals designed to affect saving. A steady state occurs when the system of contributions and withdrawals has completed a full life cycle. The model estimates steady-state revenue yields per dollar contributed under four different systems of taxing saving: fully taxing it, allowing a deduction for contributions, allowing tax-free withdrawals, and allowing temporary deferral of investment income. The model then applies those revenue yields to estimates of how savings
Creation-Date: 2006-02-10
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2006-04_0.pdf
File-Format: Application/pdf
Number: 17616
Classification-JEL:
Handle: RePEc:cbo:wpaper:17616
Template-type: ReDIF-Paper 1.0
Author-Name: John Sabelhaus
Author-Name: Julie Topoleski
Title: Uncertain Policy for an Uncertain World: The Case of Social Security: Working Paper 2006-05
Abstract: Analysis and discussion of Social Security policy are usually based on expected fiscal and societal outcomes. However, future demographic and economic trends are uncertain, and thus ultimate outcomes for aggregate system financial flows and the distribution of taxes and benefits across generations are uncertain. This paper analyzes a state-dependent approach to policy in which future Social Security benefit formulas are tied to realized economic and demographic outcomes over time. The results, based on a microsimulation model with stochastic capabilities, show the extent to
Creation-Date: 2006-03-01
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2006-05_0.pdf
File-Format: Application/pdf
Number: 17664
Classification-JEL:
Handle: RePEc:cbo:wpaper:17664
Template-type: ReDIF-Paper 1.0
Author-Name: Jonathan A. Schwabish
Title: Earnings Inequality and High Earners: Changes During and after the Stock Market Boom of the 1990s: Working Paper 2006-06
Abstract: Jonathan A. Schwabish
Studies of earnings trends and earnings distributions are often hampered by public-use data sets that either do not adequately survey high earners or topcode high earnings. This paper uses the Social Security Administration’s Continuous Work History Sample (CWHS) and the March Current Population Survey (CPS) to analyze trends in earnings inequality during the 1990s and early 2000s, and to assess where significant differences may exist in the two data sets. The CWHS is used to track the changes in the share of earnings received by
Creation-Date: 2006-04-01
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2006-06_0.pdf
File-Format: Application/pdf
Number: 17738
Classification-JEL:
Handle: RePEc:cbo:wpaper:17738
Template-type: ReDIF-Paper 1.0
Author-Name: Juann H. Hung
Author-Name: Young Jin Kim
Title: Implications of Past Currency Crises for the U.S. Current Account Adjustment: Working Paper 2006-07
Abstract: This paper examines past currency crises to shed light on the likelihood that the adjustment of the U.S. current account deficit will involve a dollar crisis. A currency crisis is narrowly defined to be a depreciation that exceeds a critical threshold, regardless of whether it has an adverse effect on the real economy. The literature suggests that one should not infer from the experience of emerging economies what will happen to the dollar. This paper’s empirical findings lend support to that view. Everything else being equal, currencies are more likely to collapse in
Creation-Date: 2006-06-01
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2006-07_0.pdf
File-Format: Application/pdf
Number: 17861
Classification-JEL:
Handle: RePEc:cbo:wpaper:17861
Template-type: ReDIF-Paper 1.0
Author-Name: Chapin White
Title: The Slowdown in Medicare Spending Growth: Working Paper 2006-08
Abstract: The rate of so-called "excess" growth in Medicare spending per beneficiary has varied widely over the last several decades, and growth has slowed substantially in recent years. (Excess growth is defined as growth beyond the combination of the general rate of economic growth and the rate of change in the age composition among beneficiaries.) The annual rate of excess growth fell from 5.5 percent over the period from 1975 to 1983 to 0.9 percent over the period from 1992 to 2003. Changes in provider payment policies might help explain the observed slowdown. Those
Creation-Date: 2006-07-31
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2006-08_0.pdf
File-Format: Application/pdf
Number: 18017
Classification-JEL:
Handle: RePEc:cbo:wpaper:18017
Template-type: ReDIF-Paper 1.0
Author-Name: William C. Randolph
Title: International Burdens of the Corporate Income Tax: Working Paper 2006-09
Abstract: This study applies a simple two-country, five-sector, general equilibrium model based on Harberger (1995, 2006) to examine the long-run incidence of a corporate income tax in an open economy. In equilibrium, capital is assumed to be perfectly mobile internationally in the sense that the country in which a real investment is located does not matter to the marginal investor. In addition, each country is assumed to produce at least some tradable corporate goods for which the country cannot affect world output prices. Like the original Harberger (1962) model, the worldwide
Creation-Date: 2006-08-01
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2006-09_0.pdf
File-Format: Application/pdf
Number: 18067
Classification-JEL:
Handle: RePEc:cbo:wpaper:18067
Template-type: ReDIF-Paper 1.0
Author-Name: Lina Walker
Title: Private Savings, Medicaid and Uncertain Nursing Home Expenses: Working Paper 2006-10
Abstract: The Medicaid program is the largest payer of nursing home services in the nation. The magnitude of program spending and the anticipated program growth as the baby boom cohort ages have raised questions about how Medicaid affects private savings. This paper, which extends previous research, examines how high but uncertain nursing home expenses interact with Medicaid assistance to affect the savings decisions of working-age households. The analysis uses data from the Asset and Health Dynamics of the Oldest Old, and relies on variation in Medicaid eligibility standards over
Creation-Date: 2006-08-02
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2006-10_0.pdf
File-Format: Application/pdf
Number: 18108
Classification-JEL:
Handle: RePEc:cbo:wpaper:18108
Template-type: ReDIF-Paper 1.0
Author-Name: Julian P. Cristia
Title: The Effect of a First Child on Female Labor Supply: Evidence from Women Seeking Fertility Services: Working Paper 2006-11
Abstract: Estimating the causal effect of a first child on female labor supply is complicated by the endogeneity of the fertility decision. That is, factors that trigger the decision to have a first child could also affect baseline labor supply; empirical approaches that do not account for this difficulty will yield biased estimates. This paper addresses this problem by focusing on a sample of women from the National Survey of Family Growth (NSFG) who sought help to get pregnant. After a certain period, only some of these women gave birth to a child. In this instance, fertility
Creation-Date: 2006-10-19
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2006-11_0.pdf
File-Format: Application/pdf
Number: 18233
Classification-JEL:
Handle: RePEc:cbo:wpaper:18233
Template-type: ReDIF-Paper 1.0
Author-Name: C. Bora Durdu
Title: Quantitative Implications of Indexed Bonds in Small Open Economies: Working Paper 2006-12
Abstract: Recent studies have proposed setting up a benchmark market for indexed bonds to prevent "Sudden Stops," emerging-market crises initiated by sudden reversals of capital inflows. This paper analyzes the macroeconomic implications of such bonds, which would be indexed to the terms of trade or GDP, using a general equilibrium model of a small open economy with financial frictions. Although indexed bonds provide a hedge to income fluctuations and can thereby mitigate the effects of financial frictions, they introduce interest rate fluctuations. Because of this tradeoff
Creation-Date: 2006-11-15
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2006-12_0.pdf
File-Format: Application/pdf
Number: 18245
Classification-JEL:
Handle: RePEc:cbo:wpaper:18245
Template-type: ReDIF-Paper 1.0
Author-Name: Juan M. Contreras
Title: An Empirical Model of Factor Adjustment Dynamics: Working Paper 2006-13
Abstract: This paper investigates how firms dynamically adjust their use of capital, labor, energy, and materials when there are both smooth and lumpy adjustment possibilities and interrelation among adjustments. The Colombian Annual Census of Manufacturing provides evidence of these kinds of adjustment. The innovation of this paper lies in three areas: in considering the joint adjustment and interrelation of labor and capital at the establishment level; in describing the dynamic adjustment of all the production factors; and in a rich description of adjustment costs, which includes
Creation-Date: 2006-11-20
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2006-13_0.pdf
File-Format: Application/pdf
Number: 18250
Classification-JEL:
Handle: RePEc:cbo:wpaper:18250
Template-type: ReDIF-Paper 1.0
Author-Name: Nada O. Eissa
Author-Name: Seth H. Giertz
Title: Trends in High Incomes and Behavioral Responses to Taxation: Evidence from Executive Compensation and Statistics of Income Data: Working Paper 2006-14
Abstract: This paper examines income trends from 1992 to 2004 and the responsiveness of different income measures to tax changes for corporate executives and for the very highest income U.S. taxpayers. We detail the growth in executive compensation and break down the components of that growth by sources, such as the value of options and stock grants, as well as bonus income. We then examine income trends at various points in the income distribution for executives and for all taxpayers. An empirial strategy similar to that employed by Goolsbee (2000) is then used to examine the
Creation-Date: 2006-12-01
File-URL: https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/workingpaper/2006-14_0.pdf
File-Format: Application/pdf
Number: 18272
Classification-JEL:
Handle: RePEc:cbo:wpaper:18272
Template-type: ReDIF-Paper 1.0
Author-Name: Ignez M. Tristao
Title: Occupational Employment Risk and its Consequences for Unemployment Duration and Wages: Working Paper 2007-01
Abstract: There are substantial differences in unemployment durations and reemployment outcomes for workers in different occupations. This paper shows that this variation can be explained in part by differences in occupational employment risk that arise from two sources: (1) the diversification of occupational employment across industries, and (2) the volatility of industry employment fluctuations, including sectoral comovements. The analysis combines data from the Quarterly Census of Employment and Wages with the National Longitudinal Survey of Youth 1979 male sample. Applying a
Creation-Date: 2007-01-01
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2007-01_0.pdf
File-Format: Application/pdf
Number: 18287
Classification-JEL:
Handle: RePEc:cbo:wpaper:18287
Template-type: ReDIF-Paper 1.0
Author-Name: John Sabelhaus
Author-Name: Lina Walker
Title: Economic Flexibility in Microsimulation: An Age-Centered Regression Approach: Working Paper 2007-02
Abstract: This paper describes a strategy for estimating predictive equations that has been shown to work well in microsimulation modeling. The technique, referred to here as "age-centered regression," is particularly useful when the available data set for estimating a model equation is limited and the marginal effect of one or more explanatory variables might be expected to vary systematically by age. The examples used here to describe how age-centering works are taken from the labor supply equations in the Congressional Budget Office Long-Term (CBOLT) dynamic
Creation-Date: 2007-01-25
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2007-02_0.pdf
File-Format: Application/pdf
Number: 18295
Classification-JEL:
Handle: RePEc:cbo:wpaper:18295
Template-type: ReDIF-Paper 1.0
Author-Name: Julian Cristia
Author-Name: Jonathan A. Schwabish
Title: Measurement Error in the SIPP: Evidence from Matched Administrative Records: Working Paper 2007-03
Abstract: Validation studies that compare survey-reported earnings to administrative-recorded earnings are useful to assess the extent and implications of measurement error in labor market data. While previous work typically used small restrictive samples with topcoded earnings, this paper uses data from the 1996 Survey of Income and Program Participation (SIPP) Panel matched to Social Security administrative records. This large representative sample contains uncapped administrative earnings and allows us to provide more definitive evidence on measurement error. Results show that
Creation-Date: 2007-01-30
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2007-03_0.pdf
File-Format: Application/pdf
Number: 18322
Classification-JEL:
Handle: RePEc:cbo:wpaper:18322
Template-type: ReDIF-Paper 1.0
Author-Name: Naomi N. Griffin
Title: Assessing the Relationship between Economic Stability and Dynamic Employment Responses to Aggregate Shocks: Working Paper 2007-04
Abstract: Previous studies have identified a significant drop in the volatility of the U.S. GDP and other measures of aggregate activity since the mid-1980s. Yet uncertainty remains as to whether the reduced size and frequency of macroeconomic shocks, or the economy’s reduced responses to shocks, are producing aggregate economic stability. To investigate this issue, this paper looks at the changes in aggregate employment responses to shocks. Using an interrelated factor demand model, this paper finds that the monthly employment elasticity to unanticipated demand shocks has declined
Creation-Date: 2007-03-12
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2007-04_0.pdf
File-Format: Application/pdf
Number: 18422
Classification-JEL:
Handle: RePEc:cbo:wpaper:18422
Template-type: ReDIF-Paper 1.0
Author-Name: Deborah Lucas
Author-Name: Damien Moore
Title: The Student Loan Consolidation Option: An Analysis of an Exotic Financial Derivative: Working Paper 2007-05
Abstract: The federal government makes subsidized federal financing for higher education widely available. The extent of the subsidy varies over time with interest rate and credit market conditions. A loan provision that adds considerably to the size and volatility of the subsidy is the consolidation option, which allows students to convert floating-rate federal loans to a fixed rate equal to the average floating rate on their outstanding loans. We develop a model to estimate the option’s cost and to evaluate its sensitivity to changes in program rules, economic conditions, and
Creation-Date: 2007-04-01
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2007-05_0.pdf
File-Format: Application/pdf
Number: 18540
Classification-JEL:
Handle: RePEc:cbo:wpaper:18540
Template-type: ReDIF-Paper 1.0
Author-Name: David Brauer
Title: The Natural Rate of Unemployment: Working Paper 2007-06
Abstract: This paper assesses the natural rate of unemployment—the unemployment rate that arises from all sources other than fluctuations in demand associated with business cycles. The natural rate is determined by the rate at which jobs are simultaneously created and destroyed, the rate of turnover in particular jobs, and how quickly unemployed workers are matched with vacant positions. Those factors in turn depend on the characteristics of jobs and of workers and on the efficiency of the labor market’s matching process. Evidence points to a natural rate that has declined over the
Creation-Date: 2007-04-17
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2007-06_0.pdf
File-Format: Application/pdf
Number: 18566
Classification-JEL:
Handle: RePEc:cbo:wpaper:18566
Template-type: ReDIF-Paper 1.0
Author-Name: Mark Lasky
Title: Output, Investment, and Growth in a World of Putty-Clay: Working Paper 2007-07
Abstract: This paper presents a putty-clay model of capital that proceeds from profit maximization to an analytic solution for aggregate investment that fits the data well. The key innovation is a production function in which a geometric average of the capital-labor ratio embedded in each unit of capital replaces the aggregate capital-labor ratio in the standard Cobb-Douglas production function. The accelerator in this model depends on the growth rate of output in excess of labor productivity at full employment, rather than on the growth rate of output alone as in previous work.
Creation-Date: 2007-05-01
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2007-07_0.pdf
File-Format: Application/pdf
Number: 18701
Classification-JEL:
Handle: RePEc:cbo:wpaper:18701
Template-type: ReDIF-Paper 1.0
Author-Name: Jean Marie Abraham
Author-Name: Thomas DeLeire
Author-Name: Annne Beeson Royalty
Title: Health Insurance, Pensions, and Paid Leave: Access to Health Insurance at Small Firms in a Broader Benefit Context: Working Paper 2007-08
Abstract: Workers employed at small firms are substantially less likely to be offered health insurance than those at larger firms. Policymakers and researchers have long sought ways to increase access to employer insurance for workers at small firms but with little success. Most policy proposals and reforms—for example, the small group insurance reforms enacted by many states in the 1990s—have been directed specifically toward health insurance and based on the assumption that the firm-size "offer gap" in health insurance is caused by problems unique to such
Creation-Date: 2007-06-01
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2007-08_0.pdf
File-Format: Application/pdf
Number: 18725
Classification-JEL:
Handle: RePEc:cbo:wpaper:18725
Template-type: ReDIF-Paper 1.0
Author-Name: Deborah Lucas
Author-Name: Damien Moore
Title: Guaranteed Versus Direct Lending: The Case of Student Loans: Working Paper 2007-09
Abstract: The federal government makes low-cost financing for higher education widely available through its fast-growing direct and guaranteed student loan programs. Both programs offer borrowers similar loan products and terms. From the perspective of other key stakeholders, including educational institutions, commercial lenders, and state guaranty agencies, the programs differ significantly. The programs also report widely divergent budgetary costs. In this study, we propose and implement a methodology to estimate the cost of the two programs in market-value terms. In doing so, we
Creation-Date: 2007-06-15
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2007_09_studentloans_0.pdf
File-Format: Application/pdf
Number: 18759
Classification-JEL:
Handle: RePEc:cbo:wpaper:18759
Template-type: ReDIF-Paper 1.0
Author-Name: C. Bora Durdu
Author-Name: Enrique G. Mendoza
Author-Name: Marco Terrones
Title: Precautionary Demand for Foreign Assets in Sudden Stop Economies: An Assessment of the New Mercantilism: Working Paper 2007-10
Abstract: Financial globalization in emerging economies has been challenged by a series of Sudden Stops since the mid 1990s. Foreign reserves grew very rapidly during this period; hence, it is often argued that we live in the era of a New Mercantilism in which large stocks of reserves are a war chest for defense against Sudden Stops. We conduct a quantitative assessment of this argument using a stochastic intertemporal equilibrium framework with incomplete asset markets in which precautionary saving affects foreign assets through three mechanisms: business cycle volatility, financial
Creation-Date: 2007-07-01
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2007-10_0_0.pdf
File-Format: Application/pdf
Number: 18952
Classification-JEL:
Handle: RePEc:cbo:wpaper:18952
Template-type: ReDIF-Paper 1.0
Author-Name: Julian P. Cristia
Title: The Empirical Relationship Between Lifetime Earnings and Mortality: Working Paper 2007-11
Abstract: Researchers have estimated differential mortality across socioeconomic groups by classifying individuals using income in the previous year. The first problem with this strategy is reverse causation. Second, annual income is a noisy measure of permanent income. This paper tackles these two drawbacks by using better measures of lifetime earnings from administrative records to classify individuals. Results indicate that the relationship between mortality and lifetime earnings is very strong, is weaker for women than for men, varies when individual versus household earnings is
Creation-Date: 2007-08-01
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2007-11_0.pdf
File-Format: Application/pdf
Number: 19096
Classification-JEL:
Handle: RePEc:cbo:wpaper:19096
Template-type: ReDIF-Paper 1.0
Author-Name: Juan M. Contreras
Author-Name: Beomsoo Kim
Author-Name: Ignez M. Tristao
Title: Does Experience Make Better Doctors? Evidence from LASIK Eye Surgeries: Working Paper 2007-12
Abstract: We examine the "learning by doing" hypothesis in medicine using a longitudinal census of laser in situ keratomileusis (LASIK) eye surgeries collected directly from patient charts.  LASIK surgery has precise measures of presurgical condition and postsurgical outcomes.  Unlike any other surgery, the impact of unobservable conditions on outcomes is minimal.  Learning by doing is identified through observations on surgical outcomes over time for each doctor.  Our unique data set overcomes some of the major measurement problems in health outcomes, and enhances the
Creation-Date: 2007-08-29
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2007-12_0.pdf
File-Format: Application/pdf
Number: 19097
Classification-JEL:
Handle: RePEc:cbo:wpaper:19097
Template-type: ReDIF-Paper 1.0
Author-Name: Judy Ruud
Title: The Fair Value of the Federal Deposit Insurance Guarantee: Working Paper 2007-13
Abstract: The Federal Deposit Insurance Corporation (FDIC), an agency of the U.S. government, guarantees insured deposits in banks and savings associations in the event of the depository’s insolvency. When a bank fails, the shortfall between the value of the bank’s available assets and the value of its insured deposits is a cost to the deposit insurer and hence the government. As of December 2006, the FDIC insured an estimated $4.1 trillion in deposits.
Deposit insurance is accounted for in the federal budget on a cash basis. This means that the cost of deposit
Creation-Date: 2007-11-01
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2007-13_0.pdf
File-Format: Application/pdf
Number: 19355
Classification-JEL:
Handle: RePEc:cbo:wpaper:19355
Template-type: ReDIF-Paper 1.0
Author-Name: Seth H. Giertz
Title: A Sensitivity Analysis of the Elasticity of Taxable Income: Working Paper 2008-01
Abstract: This paper applies the methods of Gruber and Saez (2002) to a panel of tax returns spanning years 1979 through 2001 in order to examine the sensitivity of the elasticities of taxable and broad income to an array of factors. The paper finds that Gruber and Saez’s approach yields an estimated elasticity of taxable income (ETI) for the 1990s that is about half the size of my corresponding estimate for the 1980s. The paper finds that weighting regression results by income not only has a substantial impact on the estimates, but also results in overall estimates that are
Creation-Date: 2008-01-01
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2008-01_0.pdf
File-Format: Application/pdf
Number: 19435
Classification-JEL:
Handle: RePEc:cbo:wpaper:19435
Template-type: ReDIF-Paper 1.0
Author-Name: Juann H. Hung
Title: China's Approach to Capital Flows Since 1978: Working Paper 2008-02
Abstract: Since China began its pro-market reform in 1978, its management of capital flows has followed a cautious learning-by-doing approach, guided by the goal of propelling strong economic growth while minimizing risk to stability. Claiming that the country’s financial infrastructure is still not ready to deal with large swings of financial flows, China has frequently fine-tuned restrictions of portfolio flows but generally kept a tight rein of those flows. Meanwhile, promoting foreign direct investment (FDI) inflows (and outflows in recent years)—with the aim of accessing foreign
Creation-Date: 2008-04-16
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2008-02_0.pdf
File-Format: Application/pdf
Number: 19565
Classification-JEL:
Handle: RePEc:cbo:wpaper:19565
Template-type: ReDIF-Paper 1.0
Author-Name: Joyce Manchester
Author-Name: Jae Song
Title: Have People Delayed Claiming Retirement Benefits? Responses to Changes in Social Security Rules: Working Paper 2008-04
Abstract: Two changes have been made recently to rules governing the Social Security program: the retirement earnings test was eliminated in 2000 for people aged 65–69, and the full retirement age (FRA) for people born in 1938 or later was scheduled to gradually increase in two-month increments until reaching age 67. This paper examines changes in the age at which people claim Social Security retirement benefits in response to those changes. Data come from a 1 percent sample of administrative data from the Social Security Administration for 1997 to 2007.
Creation-Date: 2008-05-07
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2008-04_0.pdf
File-Format: Application/pdf
Number: 19575
Classification-JEL:
Handle: RePEc:cbo:wpaper:19575
Template-type: ReDIF-Paper 1.0
Author-Name: Maria I. Marika Santoro
Author-Name: Chao D. Wei
Title: The Impact of Progressive Dividend Taxation on Investment Decisions: Working Paper 2008-03
Abstract: In this paper, we study the distortionary impact of progressive dividend taxation on dynamic investment decisions under the "new view" of dividend taxation. We use a stochastic general equilibrium model to examine the qualitative and quantitative importance of the distortion. We find that the theoretical irrelevance of dividend taxation advocated by the new view does not hold when dividends are taxed progressively in an economy with uncertainty. In such an economy, dividend taxation introduces a wedge between the marginal cost and benefit of investment. The
Creation-Date: 2008-04-18
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2008-03_0.pdf
File-Format: Application/pdf
Number: 19630
Classification-JEL:
Handle: RePEc:cbo:wpaper:19630
Template-type: ReDIF-Paper 1.0
Author-Name: Eric Miller
Title: An Assessment of CES and Cobb-Douglas Production Functions: Working Paper 2008-05
Abstract: This paper surveys the empirical and theoretical literature on macroeconomic production functions and assesses whether the constant elasticity of substitution (CES) or the Cobb-Douglas specification is more appropriate for use in the CBO’s macroeconomic forecasts. The Cobb-Douglas’s major strengths are its ease of use and its seemingly good empirical fit across many data sets. Unfortunately, the Cobb-Douglas still fits the data well in cases where some of its fundamental assumptions are violated. This suggests that many empirical tests of the Cobb-Douglas are picking up a
Creation-Date: 2008-06-01
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2008-05_0.pdf
File-Format: Application/pdf
Number: 19992
Classification-JEL:
Handle: RePEc:cbo:wpaper:19992
Template-type: ReDIF-Paper 1.0
Author-Name: Robert Arnold
Title: Reestimating the Phillips Curve and the NAIRU: Working Paper 2008-06
Abstract: Recent research indicates that there have been fund amental changes in the way the economy works since the mid-1980s, including a reduction in the volatility of real GDP growth and lower rates of inflation and unemployment. Those changes have the potential to alter the inflation-unemployment tradeoff underlying the Phillips curve relationship and, consequently, the estimate of the NAIRU. This paper presents updated empirical estimates of the Philips curve and the NAIRU and explores the possibility that structural changes in the economy have shifted the underlying
Creation-Date: 2008-08-06
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2008-06_0.pdf
File-Format: Application/pdf
Number: 20009
Classification-JEL:
Handle: RePEc:cbo:wpaper:20009
Template-type: ReDIF-Paper 1.0
Author-Name: Juan M. Contreras
Author-Name: Sven H. Sinclair
Title: The Labor Supply Response in Macroeconomic Models: Working Paper 2008-07
Abstract: We evaluate the labor supply response in a stochastic overlapping generations model with incomplete markets and a non separable utility function in labor and consumption. Using a simulated panel from the model, we calculate the labor supply response to anticipated changes in wages (holding the marginal utility of wealth constant-that is, the Frisch elasticity) and to unanticipated change in wages (which describes the effect of uncertainty in labor supply responses). The model’s Frisch elasticity estimate is 0.33, which is slightly higher than the empirical estimates in the
Creation-Date: 2008-09-17
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2008-07_0.pdf
File-Format: Application/pdf
Number: 20141
Classification-JEL:
Handle: RePEc:cbo:wpaper:20141
Template-type: ReDIF-Paper 1.0
Author-Name: Seth H. Giertz
Title: Taxable Income Responses to 1990s Tax Acts: Further Explorations: Working Paper 2008-08
Abstract: This paper presents applications of variants of a differencing methodology to Internal Revenue Service tax records in order to estimate taxable income elasticities for the 1990s. Estimates are systematically examined by applying a number of sensitivity tests. Estimates are produced after altering the: (1) time interval over which observational-level behavior is measured; (2) income restrictions on the sample; (3) choice of control variables; and (4) weighting scheme used in the regressions. In general, estimates are quite sensitive to a number of different factors. In
Creation-Date: 2008-09-24
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2008-08_0.pdf
File-Format: Application/pdf
Number: 20206
Classification-JEL:
Handle: RePEc:cbo:wpaper:20206
Template-type: ReDIF-Paper 1.0
Author-Name: Kent Smetters
Author-Name: David Torregrosa
Title: Financing Losses from Catastrophic Risks: Working Paper 2008-09
Abstract: Catastrophe insurance helps spread risks and increases the ability of policyholders and the economy to recover from both natural disasters and terrorist attacks. Government policies, however, may unintentionally limit the role of the private sector in insuring against catastrophic losses. Several such policies at both the state and the federal level reduce the amount of private capital supplied to insure or hedge against catastrophic risks. One reason is that those policies often become outdated as markets innovate. Policymakers have several different options to increase
Creation-Date: 2008-11-11
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/working_paper_2008-09_0.pdf
File-Format: Application/pdf
Number: 20400
Classification-JEL:
Handle: RePEc:cbo:wpaper:20400
Template-type: ReDIF-Paper 1.0
Author-Name: Seth H. Giertz
Title: Panel Data Techniques and the Elasticity of Taxable Income: Working Paper 2008-11
Abstract: This paper examines the elasticity of taxable income with a focus on income controls designed to control for divergence in the income distribution and mean reversion. Additional emphasis is placed on the difference between short-run and longer-run responses to tax rate changes. Several panel techniques are applied to tax return data for years 1991 to 1997, followed by a cross-section analysis covering the same period. For each panel regression, an innovative inverted panel regression framework is employed to test the efficacy of the controls for mean reversion apart from
Creation-Date: 2008-12-04
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2008-11_0.pdf
File-Format: Application/pdf
Number: 20407
Classification-JEL:
Handle: RePEc:cbo:wpaper:20407
Template-type: ReDIF-Paper 1.0
Author-Name: Maria I. Marika Santoro
Author-Name: Chao D. Wei
Title: Taxation and Asset Pricing in a Production Economy: Working Paper 2008-10
Abstract: This paper studies the asset pricing implications of dividend and corporate income taxes in a stochastic general equilibrium model with production similar to Jermann (1998). In particular, we ask whether those two types of taxes introduce additional tax-related risk factors in the economy, and how the equity premium may be affected. We find that proportional dividend taxes introduce no additional risk factors and, as a result, have no impact on the equity premium. By contrast, corporate income taxes have strong implications for asset pricing. Key economic variables,
Creation-Date: 2008-11-25
File-URL: https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/workingpaper/2008-10_0.pdf
File-Format: Application/pdf
Number: 20412
Classification-JEL:
Handle: RePEc:cbo:wpaper:20412
Template-type: ReDIF-Paper 1.0
Author-Name: Jonathan A. Schwabish
Title: Identifying Rates of Emigration in the United States Using Administrative Earnings Records: Working Paper 2009-01
Abstract: Sound assessment of the impact of immigration on the economy and public policies requires accurate measurement of both inflows and outflows of migrants. This paper undertakes a new strategy to estimate emigration rates among U.S. immigrants by inferring the probability of emigration using longitudinal administrative earnings data from 1978 through 2003. Two groups of emigrants are evaluated separately: those who emigrate from the United States and those who leave both the United States and the Social Security system. The method used here finds that between 1.0 percent and 1
Creation-Date: 2009-03-18
File-URL: https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/workingpaper/2009-01_1.pdf
File-Format: Application/pdf
Number: 20516
Classification-JEL:
Handle: RePEc:cbo:wpaper:20516
Template-type: ReDIF-Paper 1.0
Author-Name: Robert Black
Author-Name: Cyrus Karr
Title: Estimating Outlays for Unemployment Compensation Programs: Technical Paper No. 1
Abstract: The unemployment insurance system has undergone a number of changes in recent years. These changes, combined with the variability in the unemployment rate, make outlay projections of the various programs a complex task. In order to estimate program outlays, a statistical analysis of the basic underlying relationships within the unemployment insurance system has been developed. This statistical analysis forms the base of the projetion model utilized by the Congressional Budget Office. The first two parts of this paper describe the major parameters and programs of the
Creation-Date: 1976-10-27
File-URL: https://www.cbo.gov/sites/default/files/94th-congress-1975-1976/workingpaper/1976_10_27_outlays_0.pdf
File-Format: Application/pdf
Number: 21372
Classification-JEL:
Handle: RePEc:cbo:wpaper:21372
Template-type: ReDIF-Paper 1.0
Author-Name: Nora Traum
Author-Name: Shu-Chun Susan Yang
Title: Does Government Debt Crowd Out Investment? A Bayesian DSGE Approach: Working Paper 2010-02
Abstract: We estimate the crowding-out effects of government debt for the U.S. economy using a New Keynesian model with a detailed fiscal specification. The estimation accounts for the interaction between monetary and fiscal policies. Whether private investment is crowded in or out in the short term depends on the fiscal or monetary shock that triggers debt expansion. Contrary to the conventional view of crowding out, no systematic relationship among debt, the real interest rate, and invest ment exists. At longer horizons, distortionary financing is important for the negative
Creation-Date: 2010-04-15
File-URL: https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/workingpaper/04-2010-working_paper-crowding_out_0.pdf
File-Format: Application/pdf
Number: 21397
Classification-JEL:
Handle: RePEc:cbo:wpaper:21397
Template-type: ReDIF-Paper 1.0
Author-Name: Juan M. Contreras
Author-Name: Beomsoo Kim
Author-Name: Ignez M. Tristao
Title: Does Doctors' Experience Matter in LASIK Surgeries?: Working Paper 2010-01
Abstract: In this paper, we use a longitudinal census of laser in situ keratomileusis (LASIK) eye surgeries collected directly from patient charts to examine the learning-by-doing hypothesis in medicine. LASIK surgery has precise measures of presurgical condition and postsurgical outcomes. Unlike other types of surgery, the impact of unobservable underlying patient conditions on outcomes is minimal. Individual learning by doing is identified through observations of surgical outcomes over time, based on the cumulative number of surgeries performed. Collective learning is identified
Creation-Date: 2010-03-31
File-URL: https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/workingpaper/2010-01-lasik_0.pdf
File-Format: Application/pdf
Number: 21400
Classification-JEL:
Handle: RePEc:cbo:wpaper:21400
Template-type: ReDIF-Paper 1.0
Author-Name: Jennifer C. Gravelle
Title: Corporate Tax Incidence: Review of General Equilibrium Estimates and Analysis: Working Paper 2010-03
Abstract: This paper reviews the current evidence on the incidence of the corporate tax from Harberger-type general equilibrium models, with special attention to the open economy. The analysis identifies the major drivers of the results from open-economy models and compares estimates from four major studies that have examined corporate tax incidence in an open economy. The studies vary in the assumptions of critical elasticities, and the variations account for differences in the reported estimates. Adjusting the estimates from the studies to reflect central empirical estimates of key
Creation-Date: 2010-05-20
File-URL: https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/workingpaper/05-2010-working_paper-corp_tax_incidence-review_of_gen_eq_estimates_0.pdf
File-Format: Application/pdf
Number: 21486
Classification-JEL:
Handle: RePEc:cbo:wpaper:21486
Template-type: ReDIF-Paper 1.0
Author-Name: Kevin Perese
Title: Input-Output Model Analysis: Pricing Carbon Dioxide Emissions: Working Paper 2010-04
Abstract: The risk of significant climate change caused by greenhouse gas emissions is currently one of the largest environmental and economic issues facing policymakers in the United States and around the world. Carbon dioxide (CO2) is one of the most prevalent greenhouse gases released into the atmosphere, so some policymakers have placed their focus on reducing these emissions. Economists generally agree that efficient regulation of CO2 emissions involves placing a price on them. An input–output (IO) model of the U.S. economy provides
Creation-Date: 2010-06-18
File-URL: https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/workingpaper/2010-04-io_model_paper_0.pdf
File-Format: Application/pdf
Number: 21538
Classification-JEL:
Handle: RePEc:cbo:wpaper:21538
Template-type: ReDIF-Paper 1.0
Author-Name: David Auerbach
Author-Name: Janet Holtzblatt
Author-Name: Paul Jacobs
Author-Name: Alexandra Minicozzi
Title: Will Health Insurance Mandates Increase Coverage? Synthesizing Perspectives from Health, Tax, and Behavioral Economics: Working Paper 2010-05
Abstract: This paper provides an analytical framework for evaluating the effects of individual health insurance mandates on coverage. That framework draws from the literature in three disciplines—health economics, tax compliance, and behavioral economics—to identify the factors that affect people’s responses to health insurance mandates. The health economics literature examines how people value health insurance and how changes in its costs affect coverage. The tax compliance literature indicates that the probability of detection and people’s attitudes toward risk affect perceptions
Creation-Date: 2010-08-21
File-URL: https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/workingpaper/working_paper_2010-05-health_insurance_mandate.pdf
File-Format: Application/pdf
Number: 21600
Classification-JEL:
Handle: RePEc:cbo:wpaper:21600
Template-type: ReDIF-Paper 1.0
Author-Name: Andrew Stocking
Title: Unintended Consequences of Price Controls: An Application to Allowance Markets: Working Paper 2010-06
Abstract: Price controls established in an emissions allowance market to constrain allowance prices between a ceiling and a floor offer a mechanism to reduce cost uncertainty in a cap-and-trade program; however, they could provide opportunities for strategic actions by firms that would result in lower government revenue and greater emissions than in the absence of controls. In particular, when the ceiling price is supported by introducing new allowances into the market, firms could choose to buy allowances at the ceiling price, regardless of the prevailing market price, in order to
Creation-Date: 2010-09-20
File-URL: https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/workingpaper/pricecontrolscaptrade_0.pdf
File-Format: Application/pdf
Number: 21833
Classification-JEL:
Handle: RePEc:cbo:wpaper:21833
Template-type: ReDIF-Paper 1.0
Author-Name: Juann H. Hung
Author-Name: Rong Qian
Title: Why Is China's Saving Rate So High? A Comparative Study of Cross-Country Panel Data: Working Paper 2010-07
Abstract: This paper uses a large cross-country panel dataset to estimate models of national saving rates and addresses two related issues. First, to what extent can China’s saving rate be explained by models of saving rates? Second, what are the factors responsible for China’s extraordinarily high saving rates?
We find that our benchmark models explain about 72 to 76 percent of China’s national saving rate during 1990-2007, depending on whether China is included in the dataset. China’s national saving rate during that period is higher than the predictions of those
Creation-Date: 2010-11-18
File-URL: https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/workingpaper/2010-07-chinasavingrate_0.pdf
File-Format: Application/pdf
Number: 21920
Classification-JEL:
Handle: RePEc:cbo:wpaper:21920
Template-type: ReDIF-Paper 1.0
Author-Name: Athiphat Muthitacharoen
Title: The Impact of the Estate Tax on Capital Gains Realizations: Evidence from the Taxpayer Relief Act of 1997: Working Paper 2010-08
Abstract: This study investigates the effects of the estate tax on decisions to realize capital gains. It identifies the effects on realization decisions through the changes in the estate tax exemption level introduced by the Taxpayer Relief Act of 1997 (TRA97). Using data from the Survey of Consumer Finance (SCF), the analysis focuses on changes in capital gains realization by households that were affected by an increase in the estate tax exemption level. Applying the generalized Tobit procedure that corrects for sample selection and endogeneity in tax variables, the study finds
Creation-Date: 2010-11-23
File-URL: https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/workingpaper/2010-08-estatetaxandcapitalgains_0.pdf
File-Format: Application/pdf
Number: 21941
Classification-JEL:
Handle: RePEc:cbo:wpaper:21941
Template-type: ReDIF-Paper 1.0
Author-Name: Marika Santoro
Author-Name: Chao Wei
Title: The Welfare Cost of Capital Taxation: An Asset Market Approach (Working Paper 2011-03)
Abstract: We use an asset pricing perspective to provide a novel interpretation of the marginal welfare cost of capital income taxes. We show that the marginal welfare cost can be interpreted as the normalized present discounted value of consumption distortions from capital income taxes. Such an interpretation emphasizes the importance of the discount rate used to value future consumption distortions, especially in the presence of uncertainty. We find that the discount rate decreases as the capital income tax rate increases, thus increasing the welfare cost of taxes. The variations
Creation-Date: 2011-08-17
File-URL: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/wp2011-03-welfarecostofcapitaltaxation_1.pdf
File-Format: Application/pdf
Number: 41152
Classification-JEL:
Handle: RePEc:cbo:wpaper:41152
Template-type: ReDIF-Paper 1.0
Author-Name: Jon Huntley
Author-Name: Eric Miller
Title: An Evaluation of CBO Forecasts: Working Paper 2009-02
Abstract: We compare the performance of a subset of CBO's economic forecasts against that of an unrestricted vector autoregression (VAR) model. We evaluate forecasts of real economic indicators as well as budget-related nominal statistics. We find that under most specifications, the VAR performs competitively with, if slightly worse than, the corresponding CBO forecasts at up to 20 quarters. Therefore, a simple VAR is unlikely to be able to contribute directly to improving budget forecasts. The only series for which the VAR outperforms the CBO forecast is the growth in real
Creation-Date: 2009-08-10
File-URL: https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/workingpaper/2009-02_0.pdf
File-Format: Application/pdf
Number: 41195
Classification-JEL:
Handle: RePEc:cbo:wpaper:41195
Template-type: ReDIF-Paper 1.0
Author-Name: Maria I. Marika Santoro
Title: The CBO Infinite-Horizon Model with Idiosyncratic Uncertainty and Borrowing Constraints: Working Paper 2009-03
Abstract: This paper describes the infinite-horizon general equilibrium model that, among other models, CBO uses for its analysis of the President's budgetary proposals. Agents in the model live forever and face uninsurable, individual-specific working-ability shocks and borrowing constraints, and so they differ ex post in both income and wealth. The combination of idiosyncratic uncertainty and borrowing constraints affects household decisions about saving and working: households engage in precautionary saving to self-insure against uncertainty, and labor supply decisions are
Creation-Date: 2009-10-27
File-URL: https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/workingpaper/2009-03_0.pdf
File-Format: Application/pdf
Number: 41375
Classification-JEL:
Handle: RePEc:cbo:wpaper:41375
Template-type: ReDIF-Paper 1.0
Author-Name: Jonathan Huntley
Author-Name: Eric Miller
Title: Using DSGE Models: Working Paper 2009-04
Abstract: This paper is intended to be pedagogical rather than a presentation of original research. We describe a simple dynamic, stochastic general equilibrium (DSGE) model with capital utilization, capital adjustment costs, and a simple Cobb-Douglas technology to illustrate how DSGE models can be used to explain the past and to forecast the future. We identify one method to directly estimate latent variables and parameters in a DSGE model. We then construct estimates of the latent variables and shocks, the latter of which drive observed variations in economic activity. Those latent
Creation-Date: 2009-10-30
File-URL: https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/workingpaper/09-2009-using_dsge_models_0.pdf
File-Format: Application/pdf
Number: 41382
Classification-JEL:
Handle: RePEc:cbo:wpaper:41382
Template-type: ReDIF-Paper 1.0
Author-Name: Jennifer C. Gravelle
Title: Corporate Tax Incidence: A Review of Empirical Estimates and Analysis: Working Paper 2011-01
Abstract: This paper reviews seven recent studies that have used empirical methods to examine the incidence of the corporate income tax. These regression-based studies follow three general approaches. The first group of studies uses the variation in corporate tax rates across countries to determine the effect of the tax on wages. A second group adopts the same approach, but uses the variation in corporate tax rates across U.S. states instead of focusing on cross-country differences. The third set of studies adopts wage bargaining models to analyze the effect of corporate taxes on
Creation-Date: 2011-06-14
File-URL: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/06-14-2011-corporatetaxincidence_1.pdf
File-Format: Application/pdf
Number: 41511
Classification-JEL:
Handle: RePEc:cbo:wpaper:41511
Template-type: ReDIF-Paper 1.0
Author-Name: Jonathan Huntley
Author-Name: Valentina Michelangeli
Title: Can Tax Rebates Stimulate Consumption Spending in a Life-Cycle Model? (Working Paper 2011-02)
Abstract: This paper presents a life-cycle model with earnings risk, liquidity constraints, and portfolio choice over tax-deferred and taxable assets to evaluate changes to household consumption in response to transitory, anticipated income shocks, such as the 2001 federal income tax rebate. Households optimally hold a large share of savings in tax-deferred assets, which are encumbered by withdrawal penalties, and choose to relinquish some taxable precautionary savings in exchange for higher after-tax returns. The model predicts an increase of several percentage points in the
Creation-Date: 2011-07-14
File-URL: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/07-14-11-wp-2011-02-taxrebateconsumptionmodel_1.pdf
File-Format: Application/pdf
Number: 41581
Classification-JEL:
Handle: RePEc:cbo:wpaper:41581
Template-type: ReDIF-Paper 1.0
Author-Name: Juan Contreras
Author-Name: Joseph Nichols
Title: Consumption Responses to Permanent and Transitory Shocks to House Appreciation: Working Paper 2009-05
Abstract: We estimate the marginal propensity to consume (MPC) out of permanent and transitory shocks to house price appreciation. Besides borrowing constraints, we consider two different models under which those shocks may affect consumption. In the first one, we treat housing as a risky asset. In the second one, housing has a role as a consumption and as an investment good. In both, changes in the rate of house price appreciation may affect nonhousing consumption. Shocks to appreciation rates may happen when increases in future house prices are expected to differ from the current
Creation-Date: 2009-12-18
File-URL: https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/workingpaper/2009-5_0.pdf
File-Format: Application/pdf
Number: 41876
Classification-JEL:
Handle: RePEc:cbo:wpaper:41876
Template-type: ReDIF-Paper 1.0
Author-Name: Deborah Lucas
Author-Name: Damien Moore
Author-Name: Mitchell Remy
Title: An Evaluation of Large-Scale Mortgage Refinancing Programs: Working Paper 2011-04
Abstract: We analyze a stylized large-scale mortgage refinancing program that would relax current income and loan-to-value restrictions for borrowers who wish to refinance and whose mortgages are currently insured by Fannie Mae, Freddie Mac, or the Federal Housing Administration. The analysis relies on an estimate of the volume of incremental refinancing that would occur and an estimate of how future default and prepayment behavior would be affected by such refinancing. Relative to the status quo, the specific program analyzed here is estimated to cause an additional 2.9 million
Creation-Date: 2011-09-01
File-URL: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/09-07-2011-Large-Scale_Refinancing_Program_1.pdf
File-Format: Application/pdf
Number: 42752
Classification-JEL:
Handle: RePEc:cbo:wpaper:42752
Template-type: ReDIF-Paper 1.0
Author-Name: Tamara Hayford
Title: The Impact of Hospital Mergers on Treatment Intensity and Health Outcomes: Working Paper 2011-05
Abstract: Objective. To analyze the impact of hospital mergers on treatment intensity and health outcomes.
Data. Hospital inpatient data from California for 1990 through 2006, encompassing forty mergers.
Study Design. I used a geographic-based IV approach to determine the effect of a zip code’s exposure to a merger. The merged facility’s market share represents exposure, instrumented with combined pre-merge shares. Additional specifications include the Herfindahl index (HHI), instrumented with predicted change in HHI.
Results.
Creation-Date: 2011-10-06
File-URL: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/10-06-2011-Hospital_Mergers_1.pdf
File-Format: Application/pdf
Number: 42753
Classification-JEL:
Handle: RePEc:cbo:wpaper:42753
Template-type: ReDIF-Paper 1.0
Author-Name: Justin Falk
Title: Comparing Wages in the Federal Government and the Private Sector: Working Paper 2012-03
Abstract: This analysis used Current Population Survey data from 2005 through 2010 to compare the hourly wages of federal employees and workers in the private sector who have certain similar observable characteristics. In that comparison, we found that the arithmetic average of wages was about 21 percent higher for federal employees than for their private-sector counterparts among workers with no more than a high school education, was about the same in both sectors among workers with a bachelor’s degree, and was 23 percent lower in the federal sector among workers with a professional
Creation-Date: 2012-01-30
File-URL: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/2012-03fedwageswp.pdf
File-Format: Application/pdf
Number: 42922
Classification-JEL:
Handle: RePEc:cbo:wpaper:42922
Template-type: ReDIF-Paper 1.0
Author-Name: Justin Falk
Title: Comparing Benefits and Total Compensation in the Federal Government and the Private Sector: Working Paper 2012-04
Abstract: This analysis integrated Current Population Survey data from 2005 through 2010 with data on a wide range of employee benefits to compare the cost of those benefits for federal employees and for workers in the private sector who have certain similar observable characteristics. In that comparison, we found that the average cost of benefits was about 72 percent higher for federal employees than for their private-sector counterparts among workers with no more than a high school education, was about 46 percent higher in the federal sector among workers with a bachelor’s degree,
Creation-Date: 2012-01-30
File-URL: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/2012-04fedbenefitswp0.pdf
File-Format: Application/pdf
Number: 42923
Classification-JEL:
Handle: RePEc:cbo:wpaper:42923
Template-type: ReDIF-Paper 1.0
Author-Name: Lyle Nelson
Title: Lessons from Medicare's Demonstration Projects on Disease Management and Care Coordination: Working Paper 2012-01
Abstract: This paper summarizes the results of Medicare demonstrations of disease management and care coordination programs. Such programs seek to improve the health care of people who have chronic conditions or whose health care is expected to be particularly costly, and they seek to reduce the costs of providing health care to those people. In six major demonstrations over the past decade, Medicare’s administrators have paid 34 programs to provide disease management or care coordination services to beneficiaries in Medicare’s fee-for-service sector. All of the programs in those
Creation-Date: 2012-01-18
File-URL: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/WP2012-01_Nelson_Medicare_DMCC_Demonstrations_1.pdf
File-Format: Application/pdf
Number: 42924
Classification-JEL:
Handle: RePEc:cbo:wpaper:42924
Template-type: ReDIF-Paper 1.0
Author-Name: Lyle Nelson
Title: Lessons from Medicare's Demonstration Projects on Value-Based Payment: Working Paper 2012-02
Abstract: This paper summarizes the results of Medicare demonstrations of value-based payment systems, which give providers financial incentives to improve the quality and efficiency of care. Only one of the four demonstrations for which results are available has yielded significant savings for the Medicare program. In that demonstration, Medicare made bundled payments to hospitals and physicians to cover all services connected with heart bypass surgeries, and Medicare spending for those services declined by about 10 percent. The other demonstrations appear to have resulted in little
Creation-Date: 2012-01-18
File-URL: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/WP2012-02_Nelson_Medicare_VBP_Demonstrations_1.pdf
File-Format: Application/pdf
Number: 42925
Classification-JEL:
Handle: RePEc:cbo:wpaper:42925
Template-type: ReDIF-Paper 1.0
Author-Name: Athiphat Muthitacharoen
Author-Name: George R. Zodrow
Title: Revisiting the Excise Tax Effects of the Property Tax: Working Paper 2012-05
Abstract: This paper analyzes the excise tax effects of a general property tax from the perspective of a small open economy facing a perfectly elastic supply of capital, focusing on the mix of forward tax-shifting to consumers and backward tax-shifting to labor and landowners. The model utilized differs from most that have appeared in the property tax literature as follows: (1) the property tax is applied in a four-sector model with three taxed sectors—manufacturing which produces a tradable good, housing and services which produce nontradable goods, and a tax-exempt agricultural
Creation-Date: 2012-02-02
File-URL: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/WorkingPaper2012-05-ExciseTaxEffectsOfPropertyTax_1.pdf
File-Format: Application/pdf
Number: 42926
Classification-JEL:
Handle: RePEc:cbo:wpaper:42926
Template-type: ReDIF-Paper 1.0
Author-Name: Molly Dahl
Author-Name: Thomas DeLeire
Author-Name: Jonathan Schwabish
Author-Name: Timothy Smeeding
Title: The Earned Income Tax Credit and Expected Social Security Retirement Benefits Among Low-Income Women: Working Paper 2012-06
Abstract: Expansions in the Earned Income Tax Credit (EITC) are associated with increases in formal employment and increases in long-term year-over-year growth in earnings for single mothers. In this study, we examine whether expansions in the EITC are likely to lead to increases in Social Security retirement benefits for less-educated women (those likely to be affected by the EITC) by increasing their employment and earnings when young.
The increases in benefits could occur through two channels: First, as the EITC pulls additional less-educated women into market
Creation-Date: 2012-03-05
File-URL: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/WorkingPaper2012-06-EITC_and_SS_Retirement_Benefits_0.pdf
File-Format: Application/pdf
Number: 43033
Classification-JEL:
Handle: RePEc:cbo:wpaper:43033
Template-type: ReDIF-Paper 1.0
Author-Name: Molly Dahl
Author-Name: Thomas DeLeire
Author-Name: Shannon Mok
Title: Food Insufficiency and Income Volatility in U.S. Households: The Effects of Imputed Earnings in the Survey of Income and Program Participation: Working Paper 2012-07
Abstract: This paper explores how the use of imputed earnings data to measure income in the Survey of Income and Program Participation affects the observed relationship between household income volatility and food insufficiency. The study finds that the inclusion of imputed earnings data when measuring income volatility substantially understates the association between large drops in household income and food insufficiency. After excluding observations with imputed earnings, large drops in income are associated with a 1.3 percentage point increase in the probability of food
Creation-Date: 2012-03-27
File-URL: https://www.cbo.gov/sites/default/files/workingpaper/WorkingPaper2012-07-FoodInsufficiencyAndIncomeVolatility_0.pdf
File-Format: Application/pdf
Number: 43137
Classification-JEL:
Handle: RePEc:cbo:wpaper:43137
Template-type: ReDIF-Paper 1.0
Author-Name: Felix Reichling
Author-Name: Charles Whalen
Title: Assessing the Short-Term Effects on Output of Changes in Federal Fiscal Policies: Working Paper 2012-08
Abstract: Changes in federal fiscal policies can have both short-term and long-term effects on output. The Congressional Budget Office’s analysis of the short-term effects focuses on the impact on the demand for goods and services. That impact can be decomposed into direct effects and indirect effects: Direct effects consist of changes in purchases of goods and services by federal agencies and by the people and organizations who are recipients of federal payments or payers of federal taxes; indirect effects enhance or offset the direct effects. The indirect effects can be summarized
Creation-Date: 2012-05-25
File-URL: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/WorkingPaper2012-08-Effects_of_Fiscal_Policies_1.pdf
File-Format: Application/pdf
Number: 43278
Classification-JEL:
Handle: RePEc:cbo:wpaper:43278
Template-type: ReDIF-Paper 1.0
Author-Name: Tim Dowd
Author-Name: Robert McClelland
Author-Name: Athiphat Muthitacharoen
Title: New Evidence on the Tax Elasticity of Capital Gains: Working Paper 2012-09
Abstract: This study uses a large panel of tax returns from 1999 to 2008 to investigate how taxes affect the decision to realize gains. The study distinguishes the persistent effect of tax changes from the transitory effect. Similar to earlier studies in the literature, we use the generalized Tobit model to address the sample selection problem and the endogeneity problem in the tax variables, but we improve the identification of the tax elasticity by using the presence of carryover loss as an exclusion restriction. We also control for the financial sophistication of taxpayers because
Creation-Date: 2012-06-15
File-URL: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/43334-taxelasticitycapgains.pdf
File-Format: Application/pdf
Number: 43334
Classification-JEL:
Handle: RePEc:cbo:wpaper:43334
Template-type: ReDIF-Paper 1.0
Author-Name: David Austin
Title: Addressing Market Barriers to Energy Efficiency in Buildings: Working Paper 2012-10
Abstract: A large share of total U.S. energy consumption—40 percent—occurs in homes and buildings. Homes and buildings are less energy efficient than they would be if people could assess the value of energy savings more easily and correctly, and if energy prices provided them with stronger incentives to do so. This paper identifies three reasons why people undervalue energy savings: misperceived energy prices, imperfect information about energy efficiency, and biased reasoning about energy savings. The paper then examines four types of policy options for addressing those underlying
Creation-Date: 2012-08-23
File-URL: https://www.cbo.gov/sites/default/files/workingpaper/AddressingMarketBarriersToEnergyEfficiencyInBuildings_WorkingPaper_2012-10_0.pdf
File-Format: Application/pdf
Number: 43476
Classification-JEL:
Handle: RePEc:cbo:wpaper:43476
Template-type: ReDIF-Paper 1.0
Author-Name: Michael Bennett
Title: Options for Modernizing Military Weather Satellites: Working Paper 2012-11
Abstract: Over the next several years, the Department of Defense (DoD) will launch the last of its weather satellites, which it uses to plan military operations and generate weather forecasts. Long-running efforts to develop replacements for those satellites encountered schedule and cost difficulties, and in December 2011, the Congress directed DoD to cancel its latest program and to prepare for a follow-on program. DoD’s plans now call for a new development effort, but it has not yet determined the capabilities it wants in that satellite. In this paper, the Congressional Budget
Creation-Date: 2012-09-20
File-URL: https://www.cbo.gov/sites/default/files/workingpaper/09-20-WeatherSatellites_0.pdf
File-Format: Application/pdf
Number: 43641
Classification-JEL:
Handle: RePEc:cbo:wpaper:43641
Template-type: ReDIF-Paper 1.0
Author-Name: Robert McClelland
Author-Name: Shannon Mok
Title: A Review of Recent Research on Labor Supply Elasticities: Working Paper 2012-12
Abstract: This paper updates a review conducted by CBO in 1996 in which the agency evaluated the academic research on the effects of changes in after-tax wages on labor supply in the U.S. economy. That review concluded that substitution elasticities were larger in absolute value than income elasticities and that the decision to work was more responsive to after-tax wages than was the choice of hours. In this update, we find that for men and single women, estimates of substitution elasticities have increased, and income elasticities still appear to be smaller in absolute value than
Creation-Date: 2012-10-25
File-URL: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/10-25-2012-recentresearchonlaborsupplyelasticities.pdf
File-Format: Application/pdf
Number: 43675
Classification-JEL:
Handle: RePEc:cbo:wpaper:43675
Template-type: ReDIF-Paper 1.0
Author-Name: Felix Reichling
Author-Name: Charles Whalen
Title: Review of Estimates of the Frisch Elasticity of Labor Supply: Working Paper 2012-13
Abstract: Among the models that CBO uses to analyze the economic effects of changes in federal fiscal policy is a life-cycle growth model. That model requires an estimate of the responsiveness of the supply of labor to a one-time temporary change in after-tax compensation, which is described by the so-called Frisch elasticity. CBO incorporates into its analyses an estimate of the Frisch elasticity that ranges from 0.27 to 0.53, with a central estimate of 0.40. This paper describes how CBO derived that range from the research literature.
Creation-Date: 2012-10-25
File-URL: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/10-25-2012-Frisch_Elasticity_of_Labor_Supply_0.pdf
File-Format: Application/pdf
Number: 43676
Classification-JEL:
Handle: RePEc:cbo:wpaper:43676
Template-type: ReDIF-Paper 1.0
Author-Name: Larry Ozanne
Title: Taxation of Owner-Occupied and Rental Housing: Working Paper 2012-14
Abstract: This paper illustrates how the different tax treatments of owner-occupied and rented houses affect the relative costs of owning and renting. In the examples, a representative landlord computes the rental rate (the ratio of the rent to the value of the house) required to break even on an investment in a house. Potential homeowners compare that market rental rate as a tenant with an implicit rental rate that reflects the cost of owning a home.
The tax advantages tend to make owning more advantageous than renting for higher-income households, but lower-
Creation-Date: 2012-11-05
File-URL: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/11-2-2012-Taxation_of_Housing_0.pdf
File-Format: Application/pdf
Number: 43691
Classification-JEL:
Handle: RePEc:cbo:wpaper:43691
Template-type: ReDIF-Paper 1.0
Author-Name: Bernard Kempinski
Author-Name: Christopher Murphy
Title: Technical Challenges of the U.S. Army’s Ground Combat Vehicle Program: Working Paper 2012-15
Abstract: The U.S. Army plans to spend about an additional $34 billion in 2013 dollars to develop and purchase a new armored vehicle for its infantry, the Ground Combat Vehicle (GCV). The GCV is supposed to operate across the full range of potential conflict types while providing unprecedented levels of protection for the full squad of soldiers it will carry. To achieve the Army’s goals, the GCV would weigh from 64 to 84 tons, making it the biggest and heaviest infantry fighting vehicle that the Army has ever fielded—as big as the M1 Abrams tank and twice as heavy as the Bradley, the
Creation-Date: 2012-11-06
File-URL: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/11-06-2012-Ground_Combat_Vehicles_0.pdf
File-Format: Application/pdf
Number: 43699
Classification-JEL:
Handle: RePEc:cbo:wpaper:43699
Template-type: ReDIF-Paper 1.0
Author-Name: Terry Dinan
Title: Offsetting a Carbon Tax’s Costs on Low-Income Households: Working Paper 2012-16
Abstract: Imposing a tax on carbon dioxide emissions would reduce the damage from climate change but would also impose a larger burden, relative to income, on low-income households than on high-income households. This paper evaluates two broad groupings of options for reducing the regressive effects of a carbon tax; one group of options would affect large segments of the economy, for example by reducing payroll taxes, and the other group of options would be targeted at low-income households, for example by providing an additional payment to households currently receiving electronic
Creation-Date: 2012-11-13
File-URL: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/11-13LowIncomeOptions_0.pdf
File-Format: Application/pdf
Number: 43713
Classification-JEL:
Handle: RePEc:cbo:wpaper:43713
Template-type: ReDIF-Paper 1.0
Author-Name: Robert Shackelton
Title: Total Factor Productivity Growth in Historical Perspective: Working Paper 2013-01
Abstract: This paper reviews the broad contours of total factor productivity (TFP) growth in the U.S. economy since 1870, highlighting the contribution of various technological innovations to the growth of different sectors of the economy. The paper also notes the correlation between TFP growth and improvements in general health and well-being as reflected in changes in life expectancy. Finally, the paper discusses the potential for continued growth in TFP in the future.
Creation-Date: 2013-03-18
File-URL: https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/workingpaper/44002_TFP_Growth_03-18-2013_1.pdf
File-Format: Application/pdf
Number: 44002
Classification-JEL:
Handle: RePEc:cbo:wpaper:44002
Template-type: ReDIF-Paper 1.0
Author-Name: Damien Moore
Author-Name: Mitchell Remy
Title: Options for Principal Forgiveness in Mortgages Involving Fannie Mae and Freddie Mac: Working Paper 2013-02
Abstract: The Congressional Budget Office (CBO) examined three options under which Fannie Mae and Freddie Mac would provide principal forgiveness to certain distressed borrowers—specifically, to borrowers who are eligible or could become eligible for the Home Affordable Modification Program (HAMP). Such borrowers represent about 4 percent of all those with mortgages involving Fannie Mae or Freddie Mac, CBO estimates. The options would reduce the amount owed by borrowers to as low as 115 percent (through the HAMP Principal Reduction Alternative), 100 percent, and 90 percent,
Creation-Date: 2013-05-01
File-URL: https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/workingpaper/44114_WorkingPaper-OptionsPrincipalForgivenesl_1.pdf
File-Format: Application/pdf
Number: 44114
Classification-JEL:
Handle: RePEc:cbo:wpaper:44114
Template-type: ReDIF-Paper 1.0
Author-Name: Derek Trunkey
Title: Implications of the Department of Defense Readiness Reporting System: Working Paper 2013-03
Abstract: The Department of Defense (DoD) is developing the DoD Readiness Reporting System (DRRS) to improve on readiness reporting relative to what occurs under the older Status of Resources and Training System (SORTS). The additions and improvements to SORTS are substantial, including the ways in which commanders assess units’ readiness for individual missions, automation of resource and training calculations, and the enhanced ability of associated units to report their combined or separate readiness. DoD’s current plans call for DRRS to be fully implemented by 2014. At present,
Creation-Date: 2013-05-07
File-URL: https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/workingpaper/44127_DefenseReadiness_1.pdf
File-Format: Application/pdf
Number: 44127
Classification-JEL:
Handle: RePEc:cbo:wpaper:44127
Template-type: ReDIF-Paper 1.0
Author-Name: Jonathan A. Schwabish
Author-Name: Julie H. Topoleski
Title: Modeling Individual Earnings in CBO’s Long-Term Microsimulation Model: Working Paper 2013-04
Abstract: This paper describes the methods developed to project individual earnings in the Congressional Budget Office Long-Term (CBOLT) microsimulation model. CBOLT is used to assess the fiscal situations of the Social Security system and the federal government as a whole. Unlike many other models that project Social Security’s finances, CBOLT projects behavior at the individual level. For each individual in the model, CBOLT projects levels of educational attainment, transitions in and out of marriage, labor force participation and employment transitions, immigration and emigration
Creation-Date: 2013-06-04
File-URL: https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/workingpaper/44306_CBOLT_1.pdf
File-Format: Application/pdf
Number: 44306
Classification-JEL:
Handle: RePEc:cbo:wpaper:44306
Template-type: ReDIF-Paper 1.0
Author-Name: Felix Reichling
Author-Name: Kent Smetters
Title: Optimal Annuitization with Stochastic Mortality Probabilities: Working Paper 2013-05
Abstract: Economic modeling dating back to Yaari (1965) shows that individuals who do not aim to leave bequests to future generations should put all of their investments into annuities rather than alternatives such as bonds. Annuities offer higher returns than alternative investment options and protect against longevity risk—they provide income in each remaining year of life, even if an individual lives for an usually long time.
This paper models decisions about purchasing annuities in a context where individuals learn new information about their health status over
Creation-Date: 2013-06-26
File-URL: https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/workingpaper/44374_MortalityProbabilities-Reichling_2_0_1.pdf
File-Format: Application/pdf
Number: 44374
Classification-JEL:
Handle: RePEc:cbo:wpaper:44374
Template-type: ReDIF-Paper 1.0
Author-Name: Melinda Buntin
Author-Name: Michael Levine
Title: Why Has Growth in Spending for Fee-for-Service Medicare Slowed?: Working Paper 2013-06
Abstract: Growth in spending per beneficiary in the fee-for-service portion of Medicare has slowed substantially in recent years. The slowdown has been widespread, extending across all of the major service categories, groups of beneficiaries that receive very different amounts of medical care, and all major regions. We estimate that slower growth in payment rates and changes in observable factors affecting beneficiaries’ demand for services explain little of the slowdown in spending growth for elderly beneficiaries between the 2000-2005 and 2007-2010 periods. Specifically, available
Creation-Date: 2013-08-22
File-URL: https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/workingpaper/44513medicarespendinggrowth-8-22.pdf
File-Format: Application/pdf
Number: 44513
Classification-JEL:
Handle: RePEc:cbo:wpaper:44513
Template-type: ReDIF-Paper 1.0
Author-Name: Shinichi Nishiyama
Title: Fiscal Policy Effects in a Heterogeneous-Agent Overlapping-Generations Economy With an Aging Population: Working Paper 2013-07
Abstract: Among the models that CBO uses to analyze the economic effects of changes in federal fiscal policy is a life-cycle growth model with overlapping generations of heterogeneous households. In this paper, we extend a similar dynamic model by incorporating a population that ages in a manner consistent with projections for the United States. Under that extension, gross domestic product per capita is projected to be about 7 percent lower in 2040, and more than 11 percent lower in the long run, if the government cuts transfer rates and increases income taxes to finance the
Creation-Date: 2013-12-06
File-URL: https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/workingpaper/44941-Nishiyama_1.pdf
File-Format: Application/pdf
Number: 44941
Classification-JEL:
Handle: RePEc:cbo:wpaper:44941
Template-type: ReDIF-Paper 1.0
Author-Name: Bruce Arnold
Title: International Trade and Carbon Leakage: Working Paper 2013-08
Abstract: Under a broad-based carbon tax or cap-and-trade program, some of the reduction in U.S. carbon dioxide emissions would probably be offset by increases in foreign emissions that would not otherwise have occurred, a phenomenon known as carbon leakage. Industries with substantial total emissions, high trade ratios, and high emission intensities are the most likely to generate substantial leakage. Therefore, the industries most likely to be sources of significant leakage through trade in their products are the chemical; primary metal (such as aluminum and iron and steel); and,
Creation-Date: 2013-12-19
File-URL: https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/workingpaper/44970-InternationalTradeCarbonLeakage_1.pdf
File-Format: Application/pdf
Number: 44970
Classification-JEL:
Handle: RePEc:cbo:wpaper:44970
Template-type: ReDIF-Paper 1.0
Author-Name: Claudia Hitaj
Author-Name: Andrew Stocking
Title: Market Efficiency and the U.S. Market for Sulfur Dioxide Allowances: Working Paper 2014-01
Abstract:  Focusing on the U.S. sulfur dioxide (SO2) allowance market from its inception (in 1994) to 2009, we model allowance prices to determine the influence of market fundamentals—such as prices of high- and low-sulfur coal—on allowance price level and volatility. Our empirical analysis finds that the SO2 market, similar to other emission markets studied in the literature, had relatively weak influence of market fundamentals for several years after launch—that is, allowance prices did not reflect marginal abatement costs for the first several years of operation. However, we find
Creation-Date: 2014-01-27
File-URL: https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/workingpaper/45044-SO2MarketAnalysis_1.pdf
File-Format: Application/pdf
Number: 45044
Classification-JEL:
Handle: RePEc:cbo:wpaper:45044
Template-type: ReDIF-Paper 1.0
Author-Name: Jonathan Huntley
Title: The Long-Run Effects of Federal Budget Deficits on National Saving and Private Domestic Investment: Working Paper 2014-02
Abstract: The Congressional Budget Office's analyses of the long-term effects of changes in federal fiscal policy include the effects of changes in federal budget deficits on aggregate output and income. Those effects depend on the responses of private saving and net inflows of foreign capital to changes in deficits. This paper reviews empirical estimates of those two effects and explains how changes in private saving and net inflows of foreign capital can offset some of the effects of changes in deficits on national saving and private domestic investment. In its analyses, CBO
Creation-Date: 2014-02-28
File-URL: https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/workingpaper/45140-NSPDI_workingPaper_1.pdf
File-Format: Application/pdf
Number: 45140
Classification-JEL:
Handle: RePEc:cbo:wpaper:45140
Template-type: ReDIF-Paper 1.0
Author-Name: Andrew Stocking
Author-Name: James Baumgardner
Author-Name: Melinda Buntin
Author-Name: Anna Cook
Title: Examining the Number of Competitors and the Cost of Medicare Part D: Working Paper 2014-04
Abstract: Most beneficiaries of Medicare's Part D prescription drug insurance choose among private drug plans to receive their coverage. This paper is the first to examine the relationship between the number of competing plan sponsors and the cost of Part D during the program's first five years. Over the period from 2006 to 2010, regional Part D markets contained between 16 and 22 plan sponsors offering stand-alone plans. Consistent with economic theory, we find that increases in the number of plan sponsors within a market were associated with lower bids and lower overhead
Creation-Date: 2014-07-30
File-URL: https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/workingpaper/45553-PartD_1.pdf
File-Format: Application/pdf
Number: 45553
Classification-JEL: I10, I11, I13, I18, I38
Handle: RePEc:cbo:wpaper:45553
Template-type: ReDIF-Paper 1.0
Author-Name: Francesca Castelli
Author-Name: Damien Moore
Author-Name: Gabriel Ehrlich
Author-Name: Jeffrey Perry
Title: Modeling the Budgetary Costs of FHA's Single Family Mortgage Insurance: Working Paper 2014-05
Abstract: This paper presents the simulation model that the Congressional Budget Office (CBO) uses to project the budgetary costs of the Federal Housing Administration's (FHA's) single-family mortgage insurance program. CBO simulates defaults, recoveries, and prepayments on cohorts of mortgages insured by FHA with key parameters estimated from a dataset of FHA-insured mortgages. Those simulations are used to estimate the loan guarantees' subsidy rates, which are the lifetime cost of FHA's insurance claim payments minus fees, expressed as a percentage of the
Creation-Date: 2014-09-11
File-URL: https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/workingpaper/45711-FHA_1.pdf
File-Format: Application/pdf
Number: 45711
Classification-JEL: G00, H50
Handle: RePEc:cbo:wpaper:45711
Template-type: ReDIF-Paper 1.0
Author-Name: Robert McClelland
Author-Name: Shannon Mok
Title: Labor Force Participation Elasticities of Women and Secondary Earners within Married Couples: Working Paper 2014-06
Abstract: Labor supply elasticities are often used to evaluate the effect of changes in tax rates on the total hours worked in the economy. Historically, married women have tended to have larger labor supply elasticities than their spouses because they were the secondary earners in a couple. However, those elasticities have fallen sharply in recent decades—a decline that has been attributed to greater labor force participation rates and increased career orientation among married women. Indeed, a growing share of wives earn more than their husbands, raising the question whether a
Creation-Date: 2014-09-29
File-URL: https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/workingpaper/49433-laborforce.pdf
File-Format: Application/pdf
Number: 49433
Classification-JEL: H00, H31, J30, J20
Handle: RePEc:cbo:wpaper:49433
Template-type: ReDIF-Paper 1.0
Author-Name: Andrew Stocking
Author-Name: James Baumgardner
Author-Name: Melinda Buntin
Author-Name: Anna Cook
Title: Assessing the Design of the Low-Income Subsidy Program in Medicare Part D: Working Paper 2014-07
Abstract: By Andrew Stocking (CBO), James Baumgardner (CBO), Melinda Buntin (Vanderbilt University), and Anna Cook (CBO)

The structure of the Medicare Part D prescription drug program generally encourages plan sponsors to submit low bids. However, rules in the program relating to low-income beneficiaries generate a different set of incentives for plans seeking to serve those beneficiaries.

We find that over the first five years of the Part D program, two types of plans emerged—those that catered primarily to beneficiaries receiving low-
Creation-Date: 2014-10-08
File-URL: https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/workingpaper/49451-AssessingLIS-MedicarePartD-WP201407_1.pdf
File-Format: Application/pdf
Number: 49451
Classification-JEL: I10, I11, I13, I18, I38
Handle: RePEc:cbo:wpaper:49451
Template-type: ReDIF-Paper 1.0
Author-Name: Matthew Goldberg
Title: Updated Death and Injury Rates of U.S. Military Personnel During the Conflicts in Iraq and Afghanistan: Working Paper 2014-08
Abstract: By Matthew Goldberg (CBO)

In Operation Iraqi Freedom, which ended on August 31, 2010, some 3,482 hostile deaths occurred among U.S. military personnel and 31,947 people were wounded in action (WIA). More than 1,800 hostile deaths occurred during Operation Enduring Freedom (in Afghanistan and surrounding countries) through November 2014; about 20,000 more people were wounded in action.

In the Iraq conflict, a larger proportion of wounded personnel survived their wounds than was the case during the Vietnam War, but the increased
Creation-Date: 2014-12-17
File-URL: https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/workingpaper/49837-Casualties_WorkingPaper-2014-08_1.pdf
File-Format: Application/pdf
Number: 49837
Classification-JEL: F52
Handle: RePEc:cbo:wpaper:49837
Template-type: ReDIF-Paper 1.0
Author-Name: William J. Carrington
Title: Do We Know Why Earnings Fall with Job Displacement? Working Paper: 2015-01
Abstract: After being displaced from their jobs, workers experience reduced earnings for many years and are at greater risks of other problems as well. The ills suffered by displaced workers motivated several recent expansions of government programs, including the unemployment insurance system, and have spurred calls for wage insurance that would provide longer-run earnings replacement. However, while the average size and the individual characteristics associated with the losses are relatively clear, the theory of displacement-induced earnings loss is scattered. Much of the policy
Creation-Date: 2015-01-29
File-URL: https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/workingpaper/49908-jobDisplacement_0.pdf
File-Format: Application/pdf
Number: 49908
Classification-JEL: J30, J60, I30
Handle: RePEc:cbo:wpaper:49908
Template-type: ReDIF-Paper 1.0
Author-Name: Felix Reichling
Author-Name: Charles Whalen
Title: The Fiscal Multiplier and Economic Policy Analysis in the United States: Working Paper 2015-02
Abstract: The recession from 2007 to 2009 sparked wide interest in the economic effects of fiscal policy. That interest is reflected in an ongoing debate over the size of the fiscal multiplier. This working paper addresses three questions: What models do economists use to estimate that multiplier? Why do estimates of it vary widely? How can economists use those estimates to judiciously analyze U.S. economic policy??
Creation-Date: 2015-02-03
File-URL: https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/workingpaper/49925-FiscalMultiplier_1.pdf
File-Format: Application/pdf
Number: 49925
Classification-JEL: E62, H30
Handle: RePEc:cbo:wpaper:49925
Template-type: ReDIF-Paper 1.0
Author-Name: David Austin
Title: Pricing Freight Transport to Account for External Costs: Working Paper 2015-03
Abstract: Although freight transport contributes significantly to the productivity of the U.S. economy, it also involves sizable costs to society. Those costs include wear and tear on roads and bridges; delays caused by traffic congestion; injuries, fatalities, and property damage from accidents; and harmful effects from exhaust emissions. No one pays those external costs directly—neither freight haulers, nor shippers, nor consumers. The unpriced external costs of transporting freight by truck (per ton-mile) are around eight times higher than by rail; those costs net of existing
Creation-Date: 2015-03-30
File-URL: https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/workingpaper/50049-Freight_Transport_Working_Paper-2.pdf
File-Format: Application/pdf
Number: 50049
Classification-JEL: H23, Q58, R40, R48
Handle: RePEc:cbo:wpaper:50049
Template-type: ReDIF-Paper 1.0
Author-Name: Perry Beider
Author-Name: David Torregrosa
Author-Name: Susan Willie
Title: Federal Reinsurance for Terrorism Risk in 2015 and Beyond: Working Paper 2015-04
Abstract: CBO analyzed a variety of options for federal insurance against the risk of terrorism before the program was reauthorized in January 2015. This paper examines in more detail some options that might be considered in the future.
Creation-Date: 2015-06-10
File-URL: https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/workingpaper/50171-TRIA_Working_Paper_1.pdf
File-Format: Application/pdf
Number: 50171
Classification-JEL: G22, G28, H12, H25, H42, H84
Handle: RePEc:cbo:wpaper:50171
Template-type: ReDIF-Paper 1.0
Author-Name: Andrew Stocking
Author-Name: Terry Dinan
Title: China’s Growing Energy Demand: Implications for the United States: Working Paper 2015-05
Abstract: Growing rapidly in recent decades, China’s demand for energy has nearly doubled since 2005—making China the world’s largest consumer of energy. That growth and the energy policies that China pursues increase the level and possibly the volatility of some energy prices, reduce the competitiveness of U.S. manufacturing firms in relation to Chinese firms but provide benefits for U.S. consumers, and increase greenhouse gas emissions. This paper examines trends in China’s energy consumption, the implications of those trends for U.S. households and businesses, and policy options
Creation-Date: 2015-06-25
File-URL: https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/workingpaper/50216-China_1.pdf
File-Format: Application/pdf
Number: 50216
Classification-JEL: Q41, Q42, Q43, Q47, Q48, Q54
Handle: RePEc:cbo:wpaper:50216
Template-type: ReDIF-Paper 1.0
Author-Name: Gabriel Ehrlich
Author-Name: Jeffrey Perry
Title: Do Large-Scale Refinancing Programs Reduce Mortgage Defaults? Evidence From a Regression Discontinuity Design: Working Paper 2015-06
Abstract: In 2012, the Federal Housing Administration (FHA) reduced fees to refinance FHA-insured mortgages obtained before---but not after---a retroactive deadline. We use a natural experiment to study how reduced mortgage payments affect default rates. Using a regression discontinuity design, we find that reducing payment size by 1 percent lowers conditional default rates by 2.75 percent. Evidence suggests that those effects are larger for borrowers with negative equity and lower credit scores. We estimate that the policy will prevent more than 35,000 defaults of FHA-insured
Creation-Date: 2015-10-08
File-URL: https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/workingpaper/50871-FHA.pdf
File-Format: Application/pdf
Number: 50871
Classification-JEL: G18, G21, E65, H50
Handle: RePEc:cbo:wpaper:50871
Template-type: ReDIF-Paper 1.0
Author-Name: Frank Russek
Author-Name: Kim Kowalewski
Title: How CBO Estimates Automatic Stabilizers: Working Paper 2015-07
Abstract: Federal receipts and outlays regularly respond to cyclical movements in the economy. When the economy is operating below its potential, personal income and other tax bases are depressed, causing revenues to be lower than if the economy was operating at its potential. At such times, outlays for unemployment insurance benefits and other types of transfer programs are elevated. By contrast, when the economy is operating above its potential, revenues are higher and transfer payments are lower than would be the case if the economy was operating at its potential. Those “automatic
Creation-Date: 2015-11-19
File-URL: https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/workingpaper/51005-AutomaticStabilizers.pdf
File-Format: Application/pdf
Number: 51005
Classification-JEL: E62
Handle: RePEc:cbo:wpaper:51005
Template-type: ReDIF-Paper 1.0
Author-Name: Xiaotong Niu
Author-Name: Melinda Buntin
Author-Name: Joyce Manchester
Title: Changes in Medicare Spending per Beneficiary by Age: Working Paper 2015-08
Abstract: The aging of the population exerts upward pressure on federal spending for health care, especially Medicare, as both the number and average age of elderly beneficiaries increase. Total Medicare expenditures may also be affected by changes in relative per-beneficiary spending for beneficiaries of different ages as the population ages. In this paper, we use the Master Beneficiary Summary File to estimate spending per beneficiary for the elderly population (people between ages 65 and 105) enrolled in the traditional fee-for-service (FFS) Medicare program between 1999 and 2012
Creation-Date: 2015-11-23
File-URL: https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/workingpaper/51027-MedicareSpending.pdf
File-Format: Application/pdf
Number: 51027
Classification-JEL: I10, I13, I18, H51
Handle: RePEc:cbo:wpaper:51027
Template-type: ReDIF-Paper 1.0
Author-Name: Edward Harris
Author-Name: Shannon Mok
Title: How CBO Estimates the Effects of the Affordable Care Act on the Labor Market: Working Paper 2015-09
Abstract: This working paper describes the methods and calculations CBO used in its August 2015 baseline projections to estimate the effects of the Affordable Care Act on the labor market.
Creation-Date: 2015-12-07
File-URL: https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/workingpaper/51065-acalabormarketeffectswp.pdf
File-Format: Application/pdf
Number: 51065
Classification-JEL: I18, J08
Handle: RePEc:cbo:wpaper:51065
Template-type: ReDIF-Paper 1.0
Author-Name: Felix Reichling
Author-Name: Shinichi Nishiyama
Title: The Costs to Different Generations of Policies That Close the Fiscal Gap: Working Paper 2015-10
Abstract: This working paper analyzes five stylized changes in federal fiscal policy that would close a fiscal gap of 1.8 percent of GDP, and measures the costs that those policy changes would impose on different generations.
Creation-Date: 2015-12-17
File-URL: https://www.cbo.gov/system/files/2018-10/51097-WorkingPaper-2015_10.pdf
File-Format: Application/pdf
Number: 51097
Classification-JEL: E62, E63, H60
Handle: RePEc:cbo:wpaper:51097
Template-type: ReDIF-Paper 1.0
Author-Name: Mark Lasky
Title: The Outlook for U.S. Production of Shale Oil: Working Paper 2016-01
Abstract: This paper describes an approach to modeling U.S. production of energy from shale resources and the outlook for that production. Production is insensitive to the price of oil in the short run but quite responsive within two to three years.
Creation-Date: 2016-05-18
File-URL: https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/workingpaper/51599-workingpaper_2016-01.pdf
File-Format: Application/pdf
Number: 51599
Classification-JEL: L70, L71, O49, Q40, Q58
Handle: RePEc:cbo:wpaper:51599
Template-type: ReDIF-Paper 1.0
Author-Name: Terry Dinan
Title: CBO’s Approach to Estimating Expected Hurricane Damage: Working Paper 2016-02
Abstract: This working paper describes how the Congressional Budget Office estimates the effects of climate change and coastal development on hurricane damage. The estimates themselves are presented in a separate report—Potential Increases in Hurricane Damage in the United States: Implications for the Federal Budget—for three selected future years: 2025, 2050, and 2075.

Climate change is projected to increase damage in two ways. First, climate change is projected to result in more frequent high-intensity hurricanes. Second, for any given storm, rising sea levels
Creation-Date: 2016-06-02
File-URL: https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/workingpaper/51610-Hurricanes_WP.pdf
File-Format: Application/pdf
Number: 51610
Classification-JEL: H50, H84, Q54
Handle: RePEc:cbo:wpaper:51610
Template-type: ReDIF-Paper 1.0
Author-Name: U. Devrim Demirel
Title: The Short-Term Effects of Tax Changes—Evidence for State Dependence: Working Paper 2016-03
Abstract: This study evaluates how the state of the economy, as measured by the rate of unemployment, influences the short-term effects of tax changes on output and employment. I examine the effects of narratively identified tax changes by employing two alternative approaches to estimating state-dependent impulse response functions that have been widely used in the recent literature. Both approaches suggest that short-term effects of tax changes on output and employment become smaller during times of higher unemployment. That may be because changes in incentives governing the supply
Creation-Date: 2016-08-03
File-URL: https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/workingpaper/51824-Working_Paper_2016_03.pdf
File-Format: Application/pdf
Number: 51824
Classification-JEL: E20, E60, H20
Handle: RePEc:cbo:wpaper:51824
Template-type: ReDIF-Paper 1.0
Author-Name: Tamara Hayford
Author-Name: Lyle Nelson
Author-Name: Alexia Diorio
Title: Projecting Hospitals’ Profit Margins Under Several Illustrative Scenarios: Working Paper 2016-04
Abstract: Changes stemming largely from implementation of the Affordable Care Act (ACA) could affect hospitals’ finances significantly. Although the ACA reduces Medicare’s payment updates for hospitals, it also expands insurance coverage, which should reduce hospitals’ costs for uncompensated care. To examine the effects of those and other provisions of federal law, this paper calculates hospitals’ profit margins and the share of hospitals that might lose money in 2025 under several illustrative scenarios. The analysis focuses on about 3,000 hospitals that provide acute care and are
Creation-Date: 2016-09-08
File-URL: https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/workingpaper/51919-Hospital-Margins_WP.pdf
File-Format: Application/pdf
Number: 51919
Classification-JEL: I11, I18
Handle: RePEc:cbo:wpaper:51919
Template-type: ReDIF-Paper 1.0
Author-Name: Janet Holtzblatt
Author-Name: Jamie McGuire
Title: Factors Affecting Revenue Estimates of Tax Compliance Proposals: Working Paper 2016-05
Abstract: This paper examines various factors that affect estimates made by the Congressional Budget Office and the staff of the Joint Committee on Taxation of the budgetary savings from tax compliance proposals. Affecting the current law baseline, against which proposed changes are measured, are the size of the tax gap and the amount of Internal Revenue Service (IRS) resources. Other considerations that affect the revenue estimates for either appropriation proposals or changes to the tax code include the distinction between detection and deterrence, the budget scorekeeping guidelines, and
Creation-Date: 2016-11-29
File-URL: https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/workingpaper/52199-wp-taxcompliance.pdf
File-Format: Application/pdf
Number: 52199
Classification-JEL: H20
Handle: RePEc:cbo:wpaper:52199
Template-type: ReDIF-Paper 1.0
Author-Name: Daniel Fried
Title: Inflation, Default, and the Currency Composition of Sovereign Debt in Emerging Economies: Working Paper 2017-01
Abstract: In emerging market economies, governments issue debt denominated both in their own currency and in foreign currencies. I develop a theory of the optimal composition of sovereign debt between local and foreign currencies. In a model with a micro-founded monetary framework a government controls monetary policy and has the ability to borrow from abroad using both local and foreign currency bonds. In this model, local currency bonds differ from foreign currency bonds in two important ways. Unlike foreign currency bonds, local currency bonds function as a contingent claim,
Creation-Date: 2017-02-02
File-URL: https://www.cbo.gov/sites/default/files/115th-congress-2017-2018/workingpaper/52385-emergingeconomieswp.pdf
File-Format: Application/pdf
Number: 52385
Classification-JEL: F30, F33
Handle: RePEc:cbo:wpaper:52385
Template-type: ReDIF-Paper 1.0
Author-Name: Jared Lane Maeda
Author-Name: Lyle Nelson
Title: An Analysis of Private-Sector Prices for Hospital Admissions: Working Paper 2017-02
Abstract: Prices for hospital admissions have received considerable attention in recent years, both because they are an important component of health care spending and because they can vary widely. In this paper, we use 2013 claims data from three large insurers to examine the hospital payment rates of those insurers in their commercial plans and their Medicare Advantage plans and compare them with Medicare’s fee-for-service (FFS) rates; we also examine the variation of those rates across and within markets. We found that the average commercial payment rate for a hospital admission
Creation-Date: 2017-04-04
File-URL: https://www.cbo.gov/system/files/115th-congress-2017-2018/workingpaper/52567-hospitalprices.pdf
File-Format: Application/pdf
Number: 52567
Classification-JEL: I10, I11, I13, I18
Handle: RePEc:cbo:wpaper:52567
Template-type: ReDIF-Paper 1.0
Author-Name: Congressional Budget Office
Title: Projecting Demand for the Services of Primary Care Doctors: Working Paper 2017-03
Abstract: Policymakers and other observers have raised concerns that demand for primary care services will exceed supply, which could adversely affect people’s health and might also increase total spending on health care. Defining demand as the amount of primary care that people received, we estimate that the general U.S. population demanded about $70 billion worth of services from primary care doctors in 2013. After being adjusted for general price inflation, that represents a 15.5 percent increase since 2003—when demand totaled about $61 billion (in 2013 dollars). We defined demand
Creation-Date: 2017-05-26
File-URL: https://www.cbo.gov/system/files/115th-congress-2017-2018/workingpaper/52748-workingpaper.pdf
File-Format: Application/pdf
Number: 52748
Classification-JEL: I11, I18, J11
Handle: RePEc:cbo:wpaper:52748
Template-type: ReDIF-Paper 1.0
Author-Name: Wendy Kiska
Author-Name: Jason Levine
Author-Name: Damien Moore
Title: Modeling the Costs of the Pension Benefit Guaranty Corporation’s Multiemployer Program: Working Paper 2017-04
Abstract: The Pension Benefit Guaranty Corporation (PBGC), a government-owned corporation, insures the pension benefits of more than 10 million participants in multiemployer defined benefit pension plans. Multiemployer plans are typically offered, as part of collective bargaining agreements, by multiple unrelated employers that are jointly responsible for funding the plan. In recent years, many multiemployer plans have experienced underfunding, and some plans now face insolvency. Many beneficiaries of insolvent plans are likely to receive less than their insured benefits, because
Creation-Date: 2017-06-06
File-URL: https://www.cbo.gov/system/files/115th-congress-2017-2018/workingpaper/52749-pbgcwp.pdf
File-Format: Application/pdf
Number: 52749
Classification-JEL: G22, G23, G28, J32
Handle: RePEc:cbo:wpaper:52749
Template-type: ReDIF-Paper 1.0
Author-Name: Xiaotong Niu
Title: Distribution of Lifetime Medicare Taxes and Spending by Sex and by Lifetime Household Earnings: Working Paper 2017-05
Abstract: This working paper projects the distribution of Medicare taxes and spending on the basis of administrative earnings data as well as demographic and economic projections from CBO’s long-term microsimulation model.
Creation-Date: 2017-08-09
File-URL: https://www.cbo.gov/system/files/115th-congress-2017-2018/workingpaper/52985-workingpaper.pdf
File-Format: Application/pdf
Number: 52985
Classification-JEL: I38
Handle: RePEc:cbo:wpaper:52985
Template-type: ReDIF-Paper 1.0
Author-Name: Shannon Mok
Title: An Evaluation of Using Linked Survey and Administrative Data to Impute Nonfilers to the Population of Tax Return Filers: Working Paper 2017-06
Abstract: Administrative tax return data are increasingly used for policy analysis and economic research. A potential weakness of that data source is that not everyone is required to file a tax return, even though information on the characteristics of those nonfilers is desirable for the analysis of various tax policies and tax administration. In this paper, I use data from the Census Bureau’s Current Population Survey (CPS) linked to administrative tax return data to obtain demographic and income characteristics of filers and nonfilers. Those linked data are also used to model an
Creation-Date: 2017-09-26
File-URL: https://www.cbo.gov/system/files/115th-congress-2017-2018/workingpaper/53125-nonfilers.pdf
File-Format: Application/pdf
Number: 53125
Classification-JEL: C81, H20
Handle: RePEc:cbo:wpaper:53125
Template-type: ReDIF-Paper 1.0
Author-Name: Edward N. Gamber (CBO)
Title: Did Treasury Debt Markets Anticipate the Persistent Decline in Long-Term Interest Rates?: Working Paper 2017-07
Abstract: Private-sector forecasters consistently missed the decline in long-term nominal interest rates over the past three decades, estimating rates that were higher (and, in some cases, much higher) than what actually occurred. This analysis examines whether bond-market participants anticipated with greater accuracy the decline in long-term rates. To explore that issue, the Congressional Budget Office compared the accuracy and bias in forecasts of long-term interest rates from the Blue Chip consensus with forecasts based on information derived from the
Creation-Date: 2017-09-27
File-URL: https://www.cbo.gov/system/files/115th-congress-2017-2018/workingpaper/53153-interestrateswp.pdf
File-Format: Application/pdf
Number: 53153
Classification-JEL: E47
Handle: RePEc:cbo:wpaper:53153
Template-type: ReDIF-Paper 1.0
Author-Name: Alice Burns
Author-Name: Tamara Hayford
Title: Effects of Medicare Advantage Enrollment on Beneficiary Risk Scores: Working Paper 2017-08
Abstract: Medicare beneficiaries may receive services through a traditional fee-for-service (FFS) program or they may enroll in Medicare Advantage (MA), under which they select a private health insurance plan. Medicare pays the MA plan to provide beneficiaries’ health care services. Medicare adjusts payments to MA plans based on beneficiaries’ demographic characteristics and documented health conditions: those traits are summarized in a risk score that estimates the relationship between beneficiary characteristics and FFS Medicare spending. Recent literature finds that health
Creation-Date: 2017-11-14
File-URL: https://www.cbo.gov/system/files/115th-congress-2017-2018/workingpaper/53270-workingpaper.pdf
File-Format: Application/pdf
Number: 53270
Classification-JEL: I13, I18, H53
Handle: RePEc:cbo:wpaper:53270
Template-type: ReDIF-Paper 1.0
Author-Name: Congressional Budget Office
Title: CBO's New Framework for Analyzing the Effects of Means-Tested Transfers and Federal Taxes on the Distribution of Income: Working Paper 2017-09
Abstract: This paper describes CBO’s new framework for analyzing the distribution of household income and how means-tested transfers and federal taxes affect that distribution. The new framework will use a new measure of income—income before transfers and taxes—to rank households and calculate average means-tested transfer rates and average federal tax rates.
Creation-Date: 2017-12-05
File-URL: https://www.cbo.gov/system/files/115th-congress-2017-2018/workingpaper/53345-workingpaper.pdf
File-Format: Application/pdf
Number: 53345
Classification-JEL: C81, D31, H20, H50, I38
Handle: RePEc:cbo:wpaper:53345
Template-type: ReDIF-Paper 1.0
Author-Name: Congressional Budget Office
Title: Issues and Challenges in Measuring and Improving the Quality of Health Care: Working Paper 2017-10
Abstract: Various stakeholders have made significant efforts to measure and improve health care quality, spurred by landmark reports issued over a decade ago that highlighted serious deficiencies. Most payers now require providers of care to report on aspects of quality as a way to measure their performance and hold them accountable for it. The most common types of initiatives to measure and improve health care quality are public reporting programs and pay-for-performance programs. Under public reporting programs, providers’ performance on quality measures is publicly disseminated to
Creation-Date: 2017-12-11
File-URL: https://www.cbo.gov/system/files/115th-congress-2017-2018/workingpaper/53387-workingpaper.pdf
File-Format: Application/pdf
Number: 53387
Classification-JEL: H51, I18
Handle: RePEc:cbo:wpaper:53387
Template-type: ReDIF-Paper 1.0
Author-Name: Daria Pelech
Title: An Analysis of Private-Sector Prices for Physicians’ Services: Working Paper 2018-01
Abstract: Physicians’ services account for a substantial portion of health care spending in the United States. Using 2014 claims data from three major insurers, we analyzed the prices paid for 20 common services and compared those prices with the estimated amounts that Medicare’s fee-for-service (FFS) program would pay for the same services. We found that average commercial prices were substantially higher than Medicare FFS prices and were up to three times higher out of network than in network. In contrast, average prices paid by those insurers in their Medicare Advantage plans were
Creation-Date: 2018-01-12
File-URL: https://www.cbo.gov/system/files/115th-congress-2017-2018/workingpaper/53441-workingpaper.pdf
File-Format: Application/pdf
Number: 53441
Classification-JEL: I10, I11, I13
Handle: RePEc:cbo:wpaper:53441
Template-type: ReDIF-Paper 1.0
Author-Name: Robert W. Arnold
Title: How CBO Produces Its 10-Year Economic Forecast: Working Paper 2018-02
Abstract: As part of its mandate to provide nonpartisan analyses to assist economic and budgetary decisions by the Congress, CBO prepares an economic forecast twice per year. Those forecasts are used in the agency’s projections for the federal budget and cost estimates for proposed federal legislation. Forecasts of gross domestic product, inflation, interest rates, and income play a particularly significant role in the agency’s budgetary analysis; for example, projections of wages and salaries are used to forecast individual income tax receipts. This paper describes the process used
Creation-Date: 2018-02-02
File-URL: https://www.cbo.gov/system/files/115th-congress-2017-2018/workingpaper/53537-workingpaper.pdf
File-Format: Application/pdf
Number: 53537
Classification-JEL: E17
Handle: RePEc:cbo:wpaper:53537
Template-type: ReDIF-Paper 1.0
Author-Name: Robert Shackleton
Title: Estimating and Projecting Potential Output Using CBO’s Forecasting Growth Model: Working Paper 2018-03
Abstract: As part of its responsibility for producing baseline projections of the economy and the federal budget, CBO regularly produces estimates and projections of potential output, a measure of the economy’s fundamental ability to supply goods and services. The projection of potential output serves as a key input to CBO’s macroeconomic forecasts and budget projections, helping the agency maintain consistency between its projections of labor supply and capital accumulation and its projections of taxes on income from labor and capital, of federal expenditures, and of the
Creation-Date: 2018-02-15
File-URL: https://www.cbo.gov/system/files/115th-congress-2017-2018/workingpaper/53558-cbosforecastinggrowthmodel-workingpaper.pdf
File-Format: Application/pdf
Number: 53558
Classification-JEL: E17, E27
Handle: RePEc:cbo:wpaper:53558
Template-type: ReDIF-Paper 1.0
Author-Name: Congressional Budget Office
Title: CBO’s Projection of Labor Force Participation Rates: Working Paper 2018-04
Abstract: As part of its responsibility for producing baseline projections of the economy and the federal budget, the Congressional Budget Office regularly produces estimates and projections of labor force participation rates. Those projections serve as a key input to CBO’s estimate of potential output and the agency’s macroeconomic forecasts and budget projections. This paper describes the methodology used to produce CBO’s projections of labor force participation rates.The paper further examines the factors behind the recent trend decline in the overall and prime-
Creation-Date: 2018-03-16
File-URL: https://www.cbo.gov/system/files/115th-congress-2017-2018/workingpaper/53616-wp-laborforceparticipation.pdf
File-Format: Application/pdf
Number: 53616
Classification-JEL: E17, E24, E27, J21, J22
Handle: RePEc:cbo:wpaper:53616
Template-type: ReDIF-Paper 1.0
Author-Name: Dorian Carloni
Title: How Nominal Foreign Currency Depreciation Against the U.S. Dollar Affects U.S. Wealth: Working Paper 2018-05
Abstract: Foreign currency depreciation against the U.S. dollar would affect the wealth holdings of U.S. residents in several ways. Specifically, I analyze the effects of a one-time large depreciation of 20 percent. If foreign currencies depreciated by 20 percent against the U.S. dollar, the value of U.S. holdings of foreign assets would decrease by an estimated $2,451 billion and the value of U.S. liabilities to foreigners by $168 billion (values are based on 2015 holdings and values). On net, the total worth of U.S. households would decrease by $2.3 trillion—a drop of 2.2 percent.
Creation-Date: 2018-06-11
File-URL: https://www.cbo.gov/system/files/115th-congress-2017-2018/workingpaper/53931-workingpaper.pdf
File-Format: Application/pdf
Number: 53931
Classification-JEL: D31, E21, F30, F31
Handle: RePEc:cbo:wpaper:53931
Template-type: ReDIF-Paper 1.0
Author-Name: Justin Falk
Author-Name: Nadia Karamcheva
Title: Comparing the Effects of Current Pay and Defined Benefit Pensions on Employee Retention: Working Paper 2018-06
Abstract: Federal, state, and local governments continue to consider reducing the cost of their defined benefit pensions by decreasing annuity payments or having employees contribute a larger portion of their salaries toward them, thus reducing those workers’ current pay. Such reductions to compensation can decrease the human capital of a workforce through lower employee retention. Using data that span more than 30 years and reflect substantial policy changes to federal workers’ salary schedules and pension structure, we estimate that the average elasticity of job tenure with respect
Creation-Date: 2018-06-21
File-URL: https://www.cbo.gov/system/files/2018-06/54056-employeeretention.pdf
File-Format: Application/pdf
Number: 54056
Classification-JEL: J26, J33, J45
Handle: RePEc:cbo:wpaper:54056
Template-type: ReDIF-Paper 1.0
Author-Name: Bilal Habib
Title: How CBO Adjusts for Survey Underreporting of Transfer Income in Its Distributional Analyses: Working Paper 2018-07
Abstract: CBO’s analysis of the distribution of household income relies on data from the Census Bureau’s Current Population Survey (CPS). This paper describes how CBO adjusts for the underreporting of government transfers by CPS respondents.
Creation-Date: 2018-07-31
File-URL: https://www.cbo.gov/system/files/2018-07/54234-workingpaper.pdf
File-Format: Application/pdf
Number: 54234
Classification-JEL: I38
Handle: RePEc:cbo:wpaper:54234
Template-type: ReDIF-Paper 1.0
Author-Name: Congressional Budget Office
Title: Fiscal Substitution of Investment for Highway Infrastructure: Working Paper 2018-08
Abstract: The federal government provides grants to state and local governments for their transportation infrastructure. State and local governments use some of those funds to replace funds that they would have provided for such investment.
Creation-Date: 2018-08-24
File-URL: https://www.cbo.gov/system/files/2018-08/54371-workingpaper_1.pdf
File-Format: Application/pdf
Number: 54371
Classification-JEL: E22, E62, H54, H72, H76, H77
Handle: RePEc:cbo:wpaper:54371
Template-type: ReDIF-Paper 1.0
Author-Name: Mark Lasky
Title: CBO’s Model for Forecasting Business Investment: Working Paper 2018-09
Abstract: CBO models most business investment by using a modified neoclassical specification. That specification is similar to the neoclassical model in that the desired capital stock depends positively on output and negatively on the cost of capital, which includes the price of capital, taxes, and rates of return. The specification differs from the neoclassical model in that the capital stock adjusts more rapidly to changes in output than to changes in the cost of capital. In contrast, CBO models investment in capital used by agriculture and extractive industries as depending
Creation-Date: 2018-12-12
File-URL: https://www.cbo.gov/system/files/2018-12/54871-workingpaper.pdf
File-Format: Application/pdf
Number: 54871
Classification-JEL: E22, E27
Handle: RePEc:cbo:wpaper:54871
Template-type: ReDIF-Paper 1.0
Author-Name: Anna Anderson-Cook
Author-Name: Jared Maeda
Author-Name: Lyle Nelson
Title: Prices for and Spending on Specialty Drugs in Medicare Part D and Medicaid: An In-Depth Analysis: Working Paper 2019-02
Abstract: In this working paper, the Congressional Budget Office examines the prices paid for specialty drugs and spending on those drugs in Medicare Part D and Medicaid from 2010 to 2015. Specialty drugs treat chronic, complex, or rare conditions, frequently have high prices, and may require special handling or monitoring of patients. The retail prices paid to pharmacies for brand-name specialty drugs are similar in Medicare Part D and Medicaid, but net prices are much higher in Medicare Part D because rebates from manufacturers are substantially lower than in Medicaid. In 2015, the
Creation-Date: 2019-03-18
File-URL: https://www.cbo.gov/system/files/2019-03/55011-Specialty_Drugs_WP.pdf
File-Format: Application/pdf
Number: 55011
Classification-JEL: I10, I11, I13, I18
Handle: RePEc:cbo:wpaper:55011
Template-type: ReDIF-Paper 1.0
Author-Name: Edward Gamber
Author-Name: John Seliski
Title: The Effect of Government Debt on Interest Rates: Working Paper 2019-01
Abstract: Under current law, the level of federal debt relative to gross domestic product (GDP) is projected to rise significantly over the next decade. The relationship between debt and interest rates plays a key role in CBO's economic and budget projections (especially long-term projections) and for dynamic analyses of fiscal policy, where the sensitivity of interest rates with respect to changes in the level of debt is vitally important. In this analysis, we use a reduced-form regression to estimate the relationship between projected federal debt and expected long-term
Creation-Date: 2019-03-14
File-URL: https://www.cbo.gov/system/files/2019-03/55018-Debt%20Rates%20WP.pdf
File-Format: Application/pdf
Number: 55018
Classification-JEL: E43, E60, E62, H60
Handle: RePEc:cbo:wpaper:55018
Template-type: ReDIF-Paper 1.0
Author-Name: Jessica Banthin
Author-Name: Keren Hendel
Author-Name: Ben Hopkins
Author-Name: Geena Kim
Title: Sources and Preparation of Data Used in HISIM2—CBO’s Health Insurance Simulation Model: Working Paper 2019-04
Abstract: CBO’s new health insurance simulation model, HISIM2, is a microsimulation model, meaning that it uses individual-level input data to simulate population behavior. Beginning with the spring 2019 baseline budget projections, CBO completely revamped the way it models consumer and employer behavior; the agency also updated to new sources of individual-level input data. This paper describes the input data and the procedures for adjusting and adding to those data to form the sample used by HISIM2. The new model has been designed to use the Current Population Survey as its main
Creation-Date: 2019-04-18
File-URL: https://www.cbo.gov/system/files/2019-04/55087-HISIM2_WP.pdf
File-Format: Application/pdf
Number: 55087
Classification-JEL: H51, I10, I13, I18
Handle: RePEc:cbo:wpaper:55087
Template-type: ReDIF-Paper 1.0
Author-Name: Karen Stockley
Title: How Do Changes in Medical Malpractice Liability Laws Affect Health Care Spending and the Federal Budget? Working Paper 2019-03
Abstract: Changes to malpractice liability laws intended to decrease the liability of physicians and other medical providers have an ambiguous potential effect on overall health care spending (and the federal budget). Some providers may respond by performing fewer procedures that were undertaken mainly to avoid liability, whereas other providers may pursue more risky procedures and patients. This paper reviews the recent literature on the effect of changes in traditional liability laws on health care spending and presents new analyses of how such changes affect Medicare, Medicaid,
Creation-Date: 2019-04-09
File-URL: https://www.cbo.gov/system/files/2019-04/55104-Medical%20Malpractice_WP.pdf
File-Format: Application/pdf
Number: 55104
Classification-JEL: I11, I18, H51
Handle: RePEc:cbo:wpaper:55104
Template-type: ReDIF-Paper 1.0
Author-Name: Dorian Carloni
Author-Name: Daniel Fried
Author-Name: Molly Saunders-Scott
Title: The Effect of Tax-Motivated Transfer Pricing on U.S. Aggregate Trade Statistics: Working Paper 2019-05
Abstract: The prices that multinational corporations set for transactions among international affiliates—referred to as transfer prices—play an important role in determining where income is taxed. Many factors affect how multinationals set their transfer prices, including tax considerations. If tax considerations affect transfer prices, then those changes in transfer prices may distort aggregate trade and income statistics. In this paper, we analyze how corporate income tax rates affect trade flows between the affiliates of multinationals—known as related-party trade—to examine
Creation-Date: 2019-05-31
File-URL: https://www.cbo.gov/system/files/2019-05/55284-Transfer%20Pricing-WP.pdf
File-Format: Application/pdf
Number: 55284
Classification-JEL: H25, H26, F23
Handle: RePEc:cbo:wpaper:55284
Template-type: ReDIF-Paper 1.0
Author-Name: Justin Falk
Author-Name: Nadia Karamcheva
Title: The Effect of the Employer Match and Defaults on Federal Workers’ Savings Behavior in the  Thrift Savings Plan: Working Paper 2019-06
Abstract: Policymakers are weighing options that would change the retirement system for federal workers by shifting more of their deferred compensation from the defined benefit plan toward the defined contribution plan, called the Thrift Savings Plan (TSP). We use administrative longitudinal data on federal workers’ demographics, compensation, and TSP behavior to estimate the effects of an employer match and plan default options on workers’ TSP savings behavior and the cost of employer contributions. We rely primarily on two sources of exogenous variation stemming from policy changes
Creation-Date: 2019-07-16
File-URL: https://www.cbo.gov/system/files/2019-07/55447-CBO-tsp-employer-match-savings-behavior.pdf
File-Format: Application/pdf
Number: 55447
Classification-JEL: E21, E27, G41, J26, J32
Handle: RePEc:cbo:wpaper:55447
Template-type: ReDIF-Paper 1.0
Author-Name: Yiqun Gloria Chen
Title: Inflation, Inflation Expectations, and the Phillips Curve: Working Paper 2019-07
Abstract: This paper studies the current state of inflation dynamics using a Phillips curve model, assesses the degree of anchoring of inflation expectations, and analyzes the sensitivity of inflation to cyclical fluctuations of economic conditions.
Creation-Date: 2019-08-02
File-URL: https://www.cbo.gov/system/files/2019-08/55501-CBO-working-paper-inflation-expectations-and-phillips-curve.pdf
File-Format: Application/pdf
Number: 55501
Classification-JEL: E17, E31, E37
Handle: RePEc:cbo:wpaper:55501
Template-type: ReDIF-Paper 1.0
Author-Name: Congressional Budget Office
Title: CBO’s Medicare Beneficiary Cost-Sharing Model: A Technical Description: Working Paper 2019-08
Abstract: CBO uses a model to estimate the federal budgetary effects of proposed changes to the cost-sharing structure of the Medicare fee-for-service program. This paper describes that model, the analyses it can support, and an illustrative option for changing Medicare’s cost-sharing structure.
Creation-Date: 2019-10-03
File-URL: https://www.cbo.gov/system/files/2019-10/55659-CBO-medicare-beneficiary-cost-sharing-model.pdf
File-Format: Application/pdf
Number: 55659
Classification-JEL: C63, H51, I13, I18
Handle: RePEc:cbo:wpaper:55659
Template-type: ReDIF-Paper 1.0
Author-Name: Megan Carroll
Author-Name: David Torregrosa
Title: A Summary of Selected CBO Reports on Cash and Accrual Budgeting: Working Paper 2019-09
Abstract: Federal retirement programs and some federal insurance programs have long-term effects on the budget. But the federal budget process typically uses cash-based accounting measures that cover a 10-year period, which may be too short to accurately report those programs’ net budgetary effects over the long term. In contrast, using accrual accounting for such programs would accelerate the recognition of long-term costs and would display the expected costs of new commitments when they were incurred and thus were most controllable. However, such estimates are less transparent and
Creation-Date: 2019-10-09
File-URL: https://www.cbo.gov/system/files/2019-10/55672-CBO-cash-accrual-working-paper.pdf
File-Format: Application/pdf
Number: 55672
Classification-JEL: G00, H50, H60, H61, H81, H83, J32, J45
Handle: RePEc:cbo:wpaper:55672
Template-type: ReDIF-Paper 1.0
Author-Name: Nathaniel Frentz
Author-Name: Jaeger Nelson
Author-Name: Dan Ready
Author-Name: John Seliski
Title: A Simplified Model of How Macroeconomic Changes Affect the Federal Budget: Working Paper 2020-01
Abstract: The budgetary feedback model (BFM) is one tool that CBO uses to estimate how changes in the macroeconomy might affect the federal budget. The BFM approximates the budgetary feedback that would be arrived at by using a wider array of CBO's budgetary models and was built to provide a unified framework to quantify changes in projected revenues and outlays relative to CBO's baseline budget projections. This paper describes how the BFM is constructed, how it is used in CBO's dynamic analyses, and the model's limitations.
Creation-Date: 2020-01-16
File-URL: https://www.cbo.gov/system/files/2020-01/55884-CBO-BFM-working-paper.pdf
File-Format: Application/pdf
Number: 55884
Classification-JEL: E17, H20, H50, H68
Handle: RePEc:cbo:wpaper:55884
Template-type: ReDIF-Paper 1.0
Author-Name: Nadia Karamcheva
Author-Name: Jeffrey Perry
Author-Name: Constantine Yannelis
Title: Income-Driven Repayment Plans for Student Loans: Working Paper 2020-02
Abstract: In February 2020, CBO released a report on the budgetary effects of student loans repaid through income-driven plans. This paper provides additional information on the analysis the agency conducted on the characteristics of borrowers in those plans and the methods the agency used to project borrowers’ earnings, repayment, and resulting forgiveness. The results show that income-driven repayment plans are heavily used by borrowers with large balances and low earnings. The typical borrower in income-driven repayment is negatively amortizing, and substantial forgiveness is
Creation-Date: 2020-04-30
File-URL: https://www.cbo.gov/system/files/2020-04/56337-CBO-working-paper.pdf
File-Format: Application/pdf
Number: 56337
Classification-JEL: D14, G18, H52, H80, J24
Handle: RePEc:cbo:wpaper:56337
Template-type: ReDIF-Paper 1.0
Author-Name: Ron Gecan
Title: CBO's Oil Price Forecasting Record: Working Paper 2020-03
Abstract: CBO forecasts benchmark prices of oil to support its economic and budgetary projections. This paper describes the method CBO uses to forecast oil prices and assesses the quality of the agency's projections during the 1993–2019 period, including how that quality compares with that of other forecasts.
Creation-Date: 2020-05-14
File-URL: https://www.cbo.gov/system/files/2020-05/56356-CBO-oil-price-transparency-working-paper.pdf
File-Format: Application/pdf
Number: 56356
Classification-JEL: C00, G17, Q02, Q47
Handle: RePEc:cbo:wpaper:56356
Template-type: ReDIF-Paper 1.0
Author-Name: Perry Beider
Author-Name: David Torregrosa
Title: Federal Reinsurance for Terrorism Risk and Its Effects on the Budget: Working Paper 2020-04
Abstract: This paper describes CBO's methods for estimating the costs of the federal terrorism risk insurance program. It also discusses how estimates of the program's budgetary effects would differ if they were produced using accrual-based measures rather than cash-based measures.
Creation-Date: 2020-06-26
File-URL: https://www.cbo.gov/system/files/2020-06/56420-CBO-TRIA.pdf
File-Format: Application/pdf
Number: 56420
Classification-JEL: G22, H42, H60
Handle: RePEc:cbo:wpaper:56420
Template-type: ReDIF-Paper 1.0
Author-Name: Evan Herrnstadt
Author-Name: Terry Dinan
Title: CBO’s Projection of the Effect of Climate Change on U.S. Economic Output: Working Paper 2020-06
Abstract: As part of its long-term economic forecast, the Congressional Budget Office projects the effect of climate change on the growth of U.S. real gross domestic product (GDP). CBO projects that climate change will, on net, reduce average annual real GDP growth by 0.03 percentage points from 2020 to 2050, relative to growth that would occur under the climatic conditions that prevailed at the end of the 20th century.That annual growth differential accumulates to a 1.0 percent reduction in the projected level of real GDP in 2050. Of that 1.0 percent reduction,
Creation-Date: 2020-09-21
File-URL: https://www.cbo.gov/system/files/2020-09/56505-Climate-Change.pdf
File-Format: Application/pdf
Number: 56505
Classification-JEL: Q54
Handle: RePEc:cbo:wpaper:56505
Template-type: ReDIF-Paper 1.0
Author-Name: U. Devrim Demirel
Title: Labor Market Effects of Tax Changes in Times of High and Low Unemployment: Working Paper 2020-05
Abstract: This paper examines how the effects of legislated tax changes on labor market outcomes vary with the amount of slack in the economy, as measured by the rate of unemployment. I find that effects on hours worked, employment, and the unemployment rate become smaller in times of higher unemployment. I then develop a theoretical model in which changes in taxes on labor income directly affect the demand for labor by changing the costs that firms incur for employing workers. In the model, tax changes have smaller effects in times of higher unemployment because overall employee
Creation-Date: 2020-08-27
File-URL: https://www.cbo.gov/system/files/2020-08/56522-Working-Paper-2020-05.pdf
File-Format: Application/pdf
Number: 56522
Classification-JEL: E20, E60, H20
Handle: RePEc:cbo:wpaper:56522
Template-type: ReDIF-Paper 1.0
Author-Name: John Seliski
Author-Name: Aaron Betz
Author-Name: Yiqun Gloria Chen
Author-Name: U. Devrim Demirel
Title: Key Methods That CBO Used to Estimate the Effects of Pandemic-Related Legislation on Output: Working Paper 2020-07
Abstract: This paper describes key methods that the Congressional Budget Office used to estimate the effects on real (inflation-adjusted) output, or gross domestic product, of the laws enacted in response to the 2020 coronavirus pandemic. Taken together, that legislation substantially changed policies governing taxes and spending and provided significant financial support to households, businesses, and state and local governments through various channels. To quantify the short-term effects that those laws had on output by means of their influence on overall demand for goods and
Creation-Date: 2020-10-16
File-URL: https://www.cbo.gov/system/files/2020-10/56612-Key-Methods.pdf
File-Format: Application/pdf
Number: 56612
Classification-JEL: E20, E32, E62, E63, H20, H30, H50, H60, J64
Handle: RePEc:cbo:wpaper:56612
Template-type: ReDIF-Paper 1.0
Author-Name: Congressional Budget Office
Title: How CBO Analyzes the Costs of Proposals for Single-Payer Health Care Systems That Are Based on Medicare’s Fee-for-Service Program: Working Paper 2020-08
Abstract: In this paper, CBO describes the methods it has developed to analyze the federal budgetary costs of proposals for single-payer health care systems that are based on the Medicare fee-for-service program. Five illustrative options show how differences in payment rates, cost sharing, and coverage of long-term services and supports under a single-payer system would affect the federal budget in 2030 and other outcomes. CBO’s projections of national health expenditures under current law are a key basis for the estimates.CBO projects that federal subsidies for
Creation-Date: 2020-12-10
File-URL: https://www.cbo.gov/system/files/2020-12/56811-Single-Payer.pdf
File-Format: Application/pdf
Number: 56811
Classification-JEL: I13
Handle: RePEc:cbo:wpaper:56811
Template-type: ReDIF-Paper 1.0
Author-Name: Christopher Adams
Author-Name: Evan Herrnstadt
Title: CBO’s Model of Drug Price Negotiations Under the Elijah E. Cummings Lower Drug Costs Now Act: Working Paper 2021-01
Abstract: One of the inputs that the Congressional Budget Office used to estimate the budgetary effects of the Elijah E. Cummings Lower Drug Costs Now Act (H.R. 3) is a simulation model of price negotiations. CBO modeled those negotiations using a Nash bargaining framework, which was based on the gains to each party—the government and the manufacturer—from a successful negotiation. The gain to the government was estimated to be the avoided cost of purchasing the next-best alternative treatment, plus the incremental clinical value of using the drug of interest instead of the
Creation-Date: 2021-02-04
File-URL: https://www.cbo.gov/system/files/2021-02/56905-Drug-Price-Negotiations.pdf
File-Format: Application/pdf
Number: 56905
Classification-JEL: I11, I18
Handle: RePEc:cbo:wpaper:56905
Template-type: ReDIF-Paper 1.0
Author-Name: Christopher P. Adams
Title: CBO's Simulation Model of New Drug Development: Working Paper 2021-09
Abstract: This paper presents the Congressional Budget Office’s simulation model for analyzing legislative proposals that may substantially affect new drug development. The model uses estimates of changes in expected future profits or development costs to estimate the percent change in the number of drug candidates entering the various stages of human clinical trials. Given changes in decisions to enter at each stage, the model estimates when and by how much the number of new drugs entering the market will change. To illustrate the implications of the model, the paper considers a
Creation-Date: 2021-08-26
File-URL: https://www.cbo.gov/system/files/2021-08/57010-New-Drug-Development.pdf
File-Format: Application/pdf
Number: 57010
Classification-JEL: I11, I18
Handle: RePEc:cbo:wpaper:57010
Template-type: ReDIF-Paper 1.0
Author-Name: Jaeger Nelson
Author-Name: Kerk Phillips
Title: The Economic Effects of Financing a Large and Permanent Increase in Government Spending: Working Paper 2021-03
Abstract: In this working paper, we analyze the long-term economic effects of financing a large and permanent increase in government expenditures of 5percent to10percent of gross domestic product (GDP) annually. This paper does not assess the economic effects of the increased government spending and focuses solely on the effects of their financing.The first part of the paper reviews the channels through which different financing mechanisms affect the economy. Specifically, the review focuses on how taxes on labor income, capital income, and consumption affect how
Creation-Date: 2021-03-22
File-URL: https://www.cbo.gov/system/files/2021-03/57021-Financing.pdf
File-Format: Application/pdf
Number: 57021
Classification-JEL: E62, H20, H31, H62
Handle: RePEc:cbo:wpaper:57021
Template-type: ReDIF-Paper 1.0
Author-Name: Julia Heinzel
Author-Name: Rebecca Heller
Author-Name: Natalie Tawil
Title: Estimating the Legal Status of Foreign-Born People: Working Paper 2021-02
Abstract: The Congressional Budget Office recently adapted a methodology to estimate, on an annual basis, the total number of people in the United States without legal status and to assign legal status to the foreign-born population in survey data to match those annual totals. This paper describes CBO’s methodology, the analytical choices made in developing that methodology, and the sensitivity of the outcomes to alternative choices.
Creation-Date: 2021-03-19
File-URL: https://www.cbo.gov/system/files/2021-03/57022-Legal-Status.pdf
File-Format: Application/pdf
Number: 57022
Classification-JEL: J15, J21, J60
Handle: RePEc:cbo:wpaper:57022
Template-type: ReDIF-Paper 1.0
Author-Name: Naveen Singhal
Title: Discrete Choice Models for Estimating Labor Supply: Working Paper 2021-04
Abstract: This paper evaluates discrete choice models as tools for analyzing the effects of tax and transfer policies on labor supply. An advantage of discrete choice models is that they distinguish changes in labor force participation from changes in the hours of work. Such models can also capture the heterogeneity in labor supply response among and within demographic subpopulations.In this paper, two types of discrete choice models are estimated using cross-sectional data from the Current Population Survey: quadratic models and quasi-linear models. The models are
Creation-Date: 2021-04-15
File-URL: https://www.cbo.gov/system/files/2021-04/57027-Discrete-Choice-Models.pdf
File-Format: Application/pdf
Number: 57027
Classification-JEL: C35, H31, J22
Handle: RePEc:cbo:wpaper:57027
Template-type: ReDIF-Paper 1.0
Author-Name: Michael Falkenheim
Title: Fair-Value Cost Estimation and Government Cash Flows: Working Paper 2021-05
Abstract: Under current law, federal agencies estimate the budgetary costs of loans and loan guarantees using the projected yields on Treasury securities to discount future cash flows to the present. That approach recognizes costs when loans originate instead of when cash flows occur, the approach agencies use to account for most other items in the federal budget. Agencies project the future cash flows of loans and loan guarantees as the average of their possible values, weighting different outcomes by their probability. Fair-value budgeting—an alternative to the approach used under
Creation-Date: 2021-04-19
File-URL: https://www.cbo.gov/system/files/2021-04/57062-Fair-Value-Budgeting.pdf
File-Format: Application/pdf
Number: 57062
Classification-JEL: G00, H50, H81, H83
Handle: RePEc:cbo:wpaper:57062
Template-type: ReDIF-Paper 1.0
Author-Name: Dorian Carloni
Title: Revisiting the Extent to Which Payroll Taxes Are Passed Through to Employees: Working Paper 2021-06
Abstract: Empirical evidence on the incidence of payroll tax changes in the United States is limited and does not generally apply to changes in U.S. federal payroll taxes. Economic models can help inform the effects of such changes on households’ well-being—that is, their welfare effects. In this paper, I rely on partial equilibrium and general equilibrium models to quantify the welfare effects of payroll tax changes.First, I develop a partial equilibrium model of tax incidence and evaluate the short-run incidence of payroll tax changes on employees in the United
Creation-Date: 2021-06-02
File-URL: https://www.cbo.gov/system/files/2021-06/57089-Payroll-Taxes.pdf
File-Format: Application/pdf
Number: 57089
Classification-JEL: H00, H22, H24
Handle: RePEc:cbo:wpaper:57089
Template-type: ReDIF-Paper 1.0
Author-Name: Brooks Pierce
Title: How Changes in the Distribution of Earnings Affect the Federal Deficit: Working Paper 2021-12
Abstract: This paper by the Congressional Budget Office examines how the federal budget deficit would have differed in 2018 under four scenarios that vary the distribution of labor earnings while leaving aggregate earnings unchanged. The scenarios were constructed to isolate the budgetary effects of changes in the distribution of earnings and do not reflect an assessment of policies that would change the distribution of earnings.CBO estimates that substantial changes in the distribution of earnings would have relatively modest effects on the deficit because of the
Creation-Date: 2021-10-05
File-URL: https://www.cbo.gov/system/files/2021-10/57217-Earning-Distribution.pdf
File-Format: Application/pdf
Number: 57217
Classification-JEL: D30, H24, H53
Handle: RePEc:cbo:wpaper:57217
Template-type: ReDIF-Paper 1.0
Author-Name: Mark Lasky
Title: The Congressional Budget Office’s Small-Scale Policy Model: Working Paper 2022-08
Abstract: The Congressional Budget Office’s small-scale policy model (CBOSS) combines features of two existing models used to analyze fiscal policy into a single workhorse model. Currently, the multipliers model focuses on short-term demand effects, whereas the policy growth model focuses on long-run equilibrium effects. Unlike the two-model approach, CBOSS passes short-run effects through to the long run. CBOSS uses interest rates as a transmission mechanism for the “crowding out” of investment. The model also consistently treats the effects of policy in both the short and long run
Creation-Date: 2022-09-22
File-URL: https://www.cbo.gov/system/files/2022-09/57254-CBOSS.pdf
File-Format: Application/pdf
Number: 57254
Classification-JEL: E20, E62, H30
Handle: RePEc:cbo:wpaper:57254
Template-type: ReDIF-Paper 1.0
Author-Name: Michael Falkenheim
Title: Governmental Risk Taking Under Market Imperfections: Working Paper 2021-07
Abstract: An extensive literature debates whether market prices should be used to measure the benefits and costs of risk in government activities or whether the government should be treated as risk neutral. This paper explores the benefits and costs of governmental risk taking in formal models of market imperfections, in which the government serves as an intermediary between different stakeholders in its finances. Some stakeholders cannot participate in markets, either because they belong to future generations or because they have no funds to invest and face borrowing constraints.
Creation-Date: 2021-06-16
File-URL: https://www.cbo.gov/system/files/2021-06/57255-Government-Risk-Taking.pdf
File-Format: Application/pdf
Number: 57255
Classification-JEL: E32, G10, G12, G18, H50, H83
Handle: RePEc:cbo:wpaper:57255
Template-type: ReDIF-Paper 1.0
Author-Name: Michael Falkenheim
Title: Fair-Value Budgeting: Practical Issues: Working Paper 2021-08
Abstract: Fair-value budgeting represents a more comprehensive measure of cost for government activities than the measure required under current law. However, fair-value budgeting raises practical questions: Which government activities would benefit from fair-value estimates? How might they be used? How can agencies estimate fair value without observing market prices for government risks? The use of fair value could depend on three criteria:Commitment, whether the government makes commitments that it cannot shed through future legislation;
Creation-Date: 2021-07-29
File-URL: https://www.cbo.gov/system/files/2021-07/57264-Fair-Value-Budgeting.pdf
File-Format: Application/pdf
Number: 57264
Classification-JEL: G00, H50, H81, H83
Handle: RePEc:cbo:wpaper:57264
Template-type: ReDIF-Paper 1.0
Author-Name: Daniel Fried
Title: CBO’s Model and Projections of U.S. International Investment Holdings and Income Flows: Working Paper 2021-10
Abstract: Since 1982, growth in the value of foreign investments in the United States has exceeded growth in the value of U.S. investments abroad and, as a result, the U.S. net international investment position has been negative and trending lower. Even though the value of foreign investments in the United States has exceeded the value of U.S. investments abroad, the total income earned by U.S. investors on their foreign asset holdings has historically exceeded the total income earned by foreign investors on their U.S. holdings. The United States is able to earn positive net
Creation-Date: 2021-08-27
File-URL: https://www.cbo.gov/system/files/2021-08/57326-International-Investment.pdf
File-Format: Application/pdf
Number: 57326
Classification-JEL: F21, F23, F37
Handle: RePEc:cbo:wpaper:57326
Template-type: ReDIF-Paper 1.0
Author-Name: Jeffrey Schafer
Title: Inflation Expectations and Their Formation: Working Paper 2022-03
Abstract: This paper reviews theory and evidence on how consumers and firms form their expectations about inflation and how monetary policymakers might influence that process; both of those factors have implications for the Congressional Budget Office's baseline projections and policy analyses.Inflation expectations are important because they affect decisions that determine actual inflation. Surveys of consumers and business managers provide especially useful data for studying the process of forming expectations. Empirical evidence suggests that economically
Creation-Date: 2022-03-15
File-URL: https://www.cbo.gov/system/files/2022-03/57398-Inflation.pdf
File-Format: Application/pdf
Number: 57398
Classification-JEL: D83, D84, E17, E31, E37
Handle: RePEc:cbo:wpaper:57398
Template-type: ReDIF-Paper 1.0
Author-Name: Dorian Carloni
Author-Name: Terry Dinan
Title: Distributional Effects of Reducing Carbon Dioxide Emissions With a Carbon Tax: Working Paper 2021-11
Abstract: Putting a price on emissions of carbon dioxide, either by taxing them or by establishing a cap- and-trade program, is one policy that lawmakers could consider to address climate change. Although such a policy could encourage cost-effective reductions in emissions throughout the economy, lawmakers have expressed concern about whether it would disproportionately affect lower-income households.Determining the distributional effects—that is, the effects on households at different income levels—of a policy that would price carbon emissions (referred to in this
Creation-Date: 2021-09-13
File-URL: https://www.cbo.gov/system/files/2021-09/57399-carbon-tax.pdf
File-Format: Application/pdf
Number: 57399
Classification-JEL: H00, H20, H23
Handle: RePEc:cbo:wpaper:57399
Template-type: ReDIF-Paper 1.0
Author-Name: Paul Burnham
Author-Name: Dorian Carloni
Title: CBO’s Model for Estimating the Effect That Federal Taxes Have on Capital Income From New Investment: Working Paper 2022-01
Abstract: The Congressional Budget Office has developed a model to estimate the effect that federal taxes have on capital income from new investment; it uses that model to help estimate how changes in tax law would affect the economy. The model follows a well-established analytical framework that involves calculating the difference between the before-tax rate of return required to justify an investment and the after-tax rate of return demanded by savers (that is, individuals purchasing the equity and debt issued by businesses). The calculation of the before-tax rate of return is
Creation-Date: 2022-02-09
File-URL: https://www.cbo.gov/system/files/2022-02/57429-CapTax.pdf
File-Format: Application/pdf
Number: 57429
Classification-JEL: C63, H25
Handle: RePEc:cbo:wpaper:57429
Template-type: ReDIF-Paper 1.0
Author-Name: Sheila Campbell and Chad Shirley
Title: Fiscal Substitution in Spending for Highway Infrastructure: Working Paper 2021-13
Abstract: In this working paper, the Congressional Budget Office provides estimates of how much state and local governments that receive federal grants for highway capital projects substitute that funding for their own spending on highway capital. We find that state and local governments reduce their own per capita spending on highway capital by 26 cents for an additional dollar of annual federal formula grants; that finding is toward the lower end of a broad range of estimates in the existing literature. The rate of substitution decreases as state and local governments run larger
Creation-Date: 2021-10-08
File-URL: https://www.cbo.gov/system/files/2021-10/57430-Fiscal-Substitution.pdf
File-Format: Application/pdf
Number: 57430
Classification-JEL: E22, E62, H54, H72, H76, H77, R42, R53
Handle: RePEc:cbo:wpaper:57430
Template-type: ReDIF-Paper 1.0
Author-Name: Lucas Goodman
Author-Name: Ben Hopkins
Author-Name: Alex Minicozzi
Author-Name: Eamon Molloy
Title: Data and Methods for Constructing Synthetic Firms in CBO’s Health Insurance Simulation Model, HISIM2: Working Paper 2021-15
Abstract: This paper discusses how the Congressional Budget Office constructs “synthetic firms”—businesses composed of artificial groups of workers—used in the agency’s health insurance simulation model, or HISIM2, which underlies projections of insurance coverage. Detailed information on a worker’s firm and coworkers is important for modelling whether that worker is offered employment-based insurance, because a worker’s access to such insurance depends on the collective effect of how much employees at the firm demand insurance and how much they will cost to insure. Unfortunately, no
Creation-Date: 2021-12-13
File-URL: https://www.cbo.gov/system/files/2021-12/57431-Synthetic-Firms.pdf
File-Format: Application/pdf
Number: 57431
Classification-JEL: H51, I13
Handle: RePEc:cbo:wpaper:57431
Template-type: ReDIF-Paper 1.0
Author-Name: Ron Gecan
Title: How Carbon Dioxide Emissions Would Respond to a Tax or Allowance Price: An Update: Working Paper 2021-16
Abstract: In this working paper, the Congressional Budget Office describes its recent update of parameters that characterize the relationship between emissions of carbon dioxide and changes in the price of those emissions. Based on a review of recent studies, CBO evaluated how a change in price induced by a tax or an allowance price on emissions would affect the amount of carbon dioxide released by the combustion of fossil fuels in the electric power sector, the transportation sector, and a composite sector that comprises the residential, commercial, and industrial sectors.
Creation-Date: 2021-12-14
File-URL: https://www.cbo.gov/system/files/2021-12/57580-Emissions.pdf
File-Format: Application/pdf
Number: 57580
Classification-JEL: H23, Q48, Q54, Q58
Handle: RePEc:cbo:wpaper:57580
Template-type: ReDIF-Paper 1.0
Author-Name: Michael Falkenheim
Author-Name: Wendy Kiska
Title: How CBO Estimates the Market Risk of Federal Credit Programs: Working Paper 2021-14
Abstract: Market risk is the component of financial risk that remains even after investors have diversified their portfolios as much as possible. Investors demand additional compensation to take on market risk. In that way, they can earn more than the return on Treasury securities, which are regarded as risk free, after netting out the average cost of default. The Congressional Budget Office supplements its formal cost estimates, which do not include the cost of market risk, with fair-value estimates, which include that cost. Because the fair-value cost of credit programs includes
Creation-Date: 2021-11-16
File-URL: https://www.cbo.gov/system/files/2021-11/57581-Market-Risk.pdf
File-Format: Application/pdf
Number: 57581
Classification-JEL: G10, G12, G18, H50, H81, H83
Handle: RePEc:cbo:wpaper:57581
Template-type: ReDIF-Paper 1.0
Author-Name: Congressional Budget Office
Title: A Markov-Switching Model of the Unemployment Rate: Working Paper 2022-05
Abstract: The unemployment rate has asymmetric dynamics: It increases rapidly in recessions and falls gradually in expansions. The Congressional Budget Office developed a Markov-switching model to help incorporate these dynamics into macroeconomic projections and cost estimates that require simulations of the national unemployment rate. The model produces simulations that match observed asymmetric business-cycle dynamics at a rate consistent with historical data. I also show that indirect duration dependence, in which transition probabilities are a function of the unemployment gap,
Creation-Date: 2022-03-28
File-URL: https://www.cbo.gov/system/files/2022-03/57582-WP.pdf
File-Format: Application/pdf
Number: 57582
Classification-JEL: C22, C24, C53, E24, E32
Handle: RePEc:cbo:wpaper:57582
Template-type: ReDIF-Paper 1.0
Author-Name: Congressional Budget Office
Title: Economic Effects of Five Illustrative Single-Payer Health Care Systems: Working Paper 2022-02
Abstract: This paper builds on previous studies published by the Congressional Budget Office about single-payer health care systems. It uses a general-equilibrium, overlapping-generations model to analyze the economic and distributional implications of five illustrative single-payer health care systems. The systems vary by their payment rates to providers, degree of cost sharing, and inclusion of benefits for long-term services and supports (LTSS). The economic effects of financing a single-payer system are beyond the scope of this paper. However, the results can be paired with some
Creation-Date: 2022-02-23
File-URL: https://www.cbo.gov/system/files/2022-02/57637-Single-Payer-Systems.pdf
File-Format: Application/pdf
Number: 57637
Classification-JEL: E62, H31, I10
Handle: RePEc:cbo:wpaper:57637
Template-type: ReDIF-Paper 1.0
Author-Name: Congressional Budget Office
Title: Quantifying the Uncertainty of Long-Term Economic Projections: Working Paper 2022-07
Abstract: This paper presents a practical method for assessing the uncertainty of long-term economic projections. Economic variables play a central role in the Congressional Budget Office’s analysis of federal spending and revenues, and the uncertainty of economic projections is a key driver of the uncertainty about the agency’s budget projections. The presented method quantifies the uncertainty of economic variables by using simulations from a multivariate statistical model in which variables are formulated as sums of unobserved stationary and nonstationary components. Experiments
Creation-Date: 2022-04-25
File-URL: https://www.cbo.gov/system/files/2022-04/57711-Uncertainty.pdf
File-Format: Application/pdf
Number: 57711
Classification-JEL: C32, C53, E17
Handle: RePEc:cbo:wpaper:57711
Template-type: ReDIF-Paper 1.0
Author-Name: Tamara B. Hayford
Author-Name: Xiaotong Niu
Author-Name: Sandra L. Decker
Title: "Lesser-of" Payment Policies and the Use of Physicians' Services Among Dual-Eligible Beneficiaries: Working Paper 2023-01
Abstract: Most dual-eligible beneficiaries—people enrolled in both Medicare and Medicaid—are eligible for Medicaid through their enrollment in the Qualified Medicare Beneficiary (QMB) program, which requires that states pay for Medicare cost sharing. Since 1997, states have gradually implemented policies under which they pay the lesser of Medicare cost sharing and the amount, if any, by which Medicaid’s payment rate for the service exceeds Medicare’s payment rate. Consequently, physicians in most states receive roughly 80 percent of the Medicare rate for primary care services
Creation-Date: 2023-01-06
File-URL: https://www.cbo.gov/system/files/2023-01/57843-Working-Paper-2023-01.pdf
File-Format: Application/pdf
Number: 57843
Classification-JEL: I13, I18
Handle: RePEc:cbo:wpaper:57843
Template-type: ReDIF-Paper 1.0
Author-Name: Congressional Budget Office
Title: A Model for Pricing Federal Housing Finance Obligations: Working Paper 2022-06
Abstract: This paper presents a risk-neutral approach used by the Congressional Budget Office to inform its estimates of the fair-value cost of mortgage obligations. The fair-value cost is the amount that a private entity would charge in a competitive market for taking the risks associated with a government activity. CBO’s approach adjusts the probability distribution of macroeconomic variables to obtain a risk-neutral distribution of default, recovery, and prepayment rates. The macroeconomic variables are calibrated by determining the adjustment that leads the estimates of the fair-
Creation-Date: 2022-04-19
File-URL: https://www.cbo.gov/system/files/2022-04/57844-WP.pdf
File-Format: Application/pdf
Number: 57844
Classification-JEL: G21, G28, H81
Handle: RePEc:cbo:wpaper:57844
Template-type: ReDIF-Paper 1.0
Author-Name: Congressional Budget Office
Title: Budgetary Implications of Economic Scenarios With Higher and Lower Interest Rates: Working Paper 2022-04
Abstract: This paper illustrates how the Congressional Budget Office’s July 2021 baseline budget projections would have differed if the agency had used two alternative economic forecasts. Because interest rates on Treasury securities are especially important for budget projections, CBO examined the budgetary implications of two scenarios with divergent paths for those rates. Specifically, CBO started with information from the Blue Chip Economic Indicators to construct the scenarios:The high-sixth scenario
Creation-Date: 2022-03-24
File-URL: https://www.cbo.gov/system/files/2022-03/57908-WP.pdf
File-Format: Application/pdf
Number: 57908
Classification-JEL: E47
Handle: RePEc:cbo:wpaper:57908
Template-type: ReDIF-Paper 1.0
Author-Name: Nadia Karamcheva
Author-Name: Victoria Perez-Zetune
Title: Defined Benefit and Defined Contribution Plans and the Distribution of Family Wealth: Working Paper 2023-02
Abstract: Family wealth inequality in the United States has risen over the past several decades, as documented by researchers using a variety of methods and data. Much of family wealth is in tax- preferred, employer-sponsored retirement plans—typically either a traditional defined benefit (DB) plan or the now more prevalent defined contribution (DC) plan. Because retirement wealth is generally less concentrated than other types, changes in the distribution of retirement wealth and in the type of retirement assets could affect overall wealth inequality.Using data
Creation-Date: 2023-02-10
File-URL: https://www.cbo.gov/system/files/2023-02/58305-Wealth.pdf
File-Format: Application/pdf
Number: 58305
Classification-JEL: J21, J26
Handle: RePEc:cbo:wpaper:58305
Template-type: ReDIF-Paper 1.0
Author-Name: Bilal Habib
Author-Name: Rebecca Heller
Title: Current Work on the Distributional Analysis of Household Income Resulting From Policy Changes: Working Paper 2022-09
Abstract: The Congressional Budget Office developed a framework to further standardize analyses of the distribution of household income and to complement analyses of policy changes’ budgetary and economic effects. This paper introduces that analytical framework and describes the agency’s current methods, along with examples.This paper discusses the analytical choices that CBO plans to make in its distributional analyses of policy changes and notes how different choices could affect the analysis. Also discussed are the inherently difficult choices associated with
Creation-Date: 2022-12-15
File-URL: https://www.cbo.gov/system/files/2022-12/58508-WP.pdf
File-Format: Application/pdf
Number: 58508
Classification-JEL: C81, D31, H20, H50, I38
Handle: RePEc:cbo:wpaper:58508
Template-type: ReDIF-Paper 1.0
Author-Name: Daniel Fried
Title: The U.S. Dollar as an International Currency and Its Economic Effects: Working Paper 2023-04
Abstract: The U.S. dollar plays an important role as the most widely used currency in global goods, services, and financial markets. Strong international demand for U.S. dollars and dollar-denominated assets associated with the dollar’s status as an international currency has increased the value of the dollar in foreign exchange markets and the value of dollar-denominated assets in financial markets. As a result, the dollar’s status has contributed to persistent U.S. trade deficits and, by lowering interest rates, to increased access to credit for U.S. households, businesses, and the
Creation-Date: 2023-04-17
File-URL: https://www.cbo.gov/system/files/2023-04/58764.pdf
File-Format: Application/pdf
Number: 58764
Classification-JEL: E58, F30, F31, F33
Handle: RePEc:cbo:wpaper:58764
Template-type: ReDIF-Paper 1.0
Author-Name: Michael Falkenheim
Title: The Welfare Effects of Debt: Crowding Out and Risk Shifting: Working Paper 2022-10
Abstract: Government debt affects people’s welfare through two distinct channels: It crowds out capital, and it shifts risk from current to future generations. This study extends Olivier Blanchard’s 2019 analysis of the welfare effects of debt by decomposing his estimates into those two categories. Blanchard estimated the change in average utility under simulations of an overlapping generations model with and without a transfer of wealth from the younger to the older generation. This study decomposes those estimated welfare effects into crowding-out and risk- shifting components and
Creation-Date: 2022-12-16
File-URL: https://www.cbo.gov/system/files/2022-12/58849-Welfare.pdf
File-Format: Application/pdf
Number: 58849
Classification-JEL: E22, E23, E43, E62, H50, H63
Handle: RePEc:cbo:wpaper:58849
Template-type: ReDIF-Paper 1.0
Author-Name: Justin Falk
Title: The Effects of Work Requirements on the Employment and Income of TANF Participants: Working Paper 2023-03
Abstract: Experiments conducted in the mid-1990s show that a combination of work requirements and work supports substantially increased the employment of cash assistance recipients in Aid to Families with Dependent Children, the predecessor program to Temporary Assistance for Needy Families (TANF) while having little effect on recipients’ average income. There is little evidence on the effects of TANF’s work requirements, though, and recent research on other means-tested programs demonstrates that their work requirements have had little effect on employment and have substantially
Creation-Date: 2023-03-09
File-URL: https://www.cbo.gov/system/files/2023-03/58867-TANF.pdf
File-Format: Application/pdf
Number: 58867
Classification-JEL: I38, J22
Handle: RePEc:cbo:wpaper:58867
Template-type: ReDIF-Paper 1.0
Author-Name: David Austin
Title: Modeling the Demand for Electric Vehicles and the Supply of Charging Stations in the United States: Working Paper 2023-06
Abstract: This paper presents a simulation model of the markets for light-duty electric vehicles (EVs) and the associated public charging infrastructure, as well as the network interactions between them. It illustrates the model’s attributes by simulating the effects of federal subsidies for public electric vehicle chargers and of an extension of tax credits for electric vehicles. I project that by the early 2030s the charger subsidies, which were signed into law in 2021 as part of the Infrastructure Investment and Jobs Act, will have increased the size of the charger network enough
Creation-Date: 2023-09-07
File-URL: https://www.cbo.gov/system/files/2023-09/58964-EV.pdf
File-Format: Application/pdf
Number: 58964
Classification-JEL: H23, H54, L98
Handle: RePEc:cbo:wpaper:58964
Template-type: ReDIF-Paper 1.0
Author-Name: U. Devrim Demirel
Author-Name: Matthew Wilson
Title: Effects of Fiscal Policy on Inflation: Implications of Supply Disruptions and Economic Slack: Working Paper 2023-05
Abstract: Fiscal policy provided substantial support to economic growth in 2020 and 2021 amid disruptions to supply in product and labor markets, adding to the inflationary pressures that emerged during the strong rebound from the pandemic-induced recession. In this paper, we investigate the implications of supply disruptions and economic slack for the inflationary effects of fiscal policy. We propose and estimate a nonlinear Phillips curve, whereby the sensitivity of inflation to changes in demand varies with supply conditions and the amount of slack in the economy. Our results
Creation-Date: 2023-04-25
File-URL: https://www.cbo.gov/system/files/2023-04/59056-Working-Paper.pdf
File-Format: Application/pdf
Number: 59056
Classification-JEL: E37, E62, E31
Handle: RePEc:cbo:wpaper:59056
Template-type: ReDIF-Paper 1.0
Author-Name: Elizabeth Ash
Author-Name: William Carrington
Author-Name: Rebecca Heller
Author-Name: Grace Hwang
Title: Exploring the Effects of Medicaid During Childhood on the Economy and the Budget: Working Paper 2023-07
Abstract: This paper examines the short- and long-term fiscal effects of Medicaid spending on children. In the short run, costs for Medicaid are paid upfront when the children (or their mothers) receive health care. In the long run, Medicaid enrollment during childhood has been shown to increase earnings in adulthood. Those higher earnings imply greater tax revenues and lower transfer payments by the federal government in the future. On a present-value basis, the Congressional Budget Office estimates that long-term fiscal effects of Medicaid spending on children could offset half or
Creation-Date: 2023-11-01
File-URL: https://www.cbo.gov/system/files/2023-10/59231-Medicaid.pdf
File-Format: Application/pdf
Number: 59231
Classification-JEL: H20, H50, H60, I13, J3
Handle: RePEc:cbo:wpaper:59231
Template-type: ReDIF-Paper 1.0
Author-Name: Byoung Hark Yoo
Title: Conditional Forecasting With a Bayesian Vector Autoregression: Working Paper 2023-08
Abstract: This paper describes how the Congressional Budget Office uses a Bayesian vector autoregression (BVAR) method to generate alternative economic projections to the agency’s baseline. The BVAR includes a wide range of key economic variables that are needed to approximate budget outcomes. Its estimation methods avoid overfitting, a situation in which a model fits historical data well while having a poor ability to project future values.Given targets of future values of some variables such as inflation, the BVAR generates economic projections consistent with
Creation-Date: 2023-11-27
File-URL: https://www.cbo.gov/system/files/2023-11/59629-BVAR.pdf
File-Format: Application/pdf
Number: 59629
Classification-JEL: C32, C53
Handle: RePEc:cbo:wpaper:59629
Template-type: ReDIF-Paper 1.0

Title: How CBO Projects Inflation
Abstract: No Abstract
Creation-Date: 2024-02-09
File-URL: https://www.cbo.gov/system/files/2024-02/59877-Inflation.pdf
File-Format: Application/pdf
Number: 59877
Classification-JEL: E01, E17, E31, E37
Handle: RePEc:cbo:wpaper:59877
Template-type: ReDIF-Paper 1.0
Author-Name: David Adler
Title: How CBO Uses the ReEDS Model to Analyze Policies in the Electric Power Sector: Working Paper 2024-02
Abstract: In this working paper, the Congressional Budget Office provides an overview of CBO-ReEDS, an adapted version of the National Renewable Energy Laboratory’s Regional Energy Deployment System (NREL’s ReEDS) model for analyzing policies in the electric power sector. The paper discusses the strengths and limitations of the model and how CBO modifies it to align with the agency’s assessment of electricity demand, fuel prices, and technology costs. Finally, the paper provides projections of the effects of the 2022 reconciliation act (Public Law 117-169) on emissions of carbon
Creation-Date: 2024-05-02
File-URL: https://www.cbo.gov/system/files/2024-05/59880-ReEDS-Working-Paper.pdf
File-Format: Application/pdf
Number: 59880
Classification-JEL: Q47, Q48, Q54, Q58
Handle: RePEc:cbo:wpaper:59880