Methods for Analyzing the Economic Effects of Fiscal Policy Changes

CBO's small-scale policy model determines in one model the short-run demand-driven responses and long-run supply-driven responses to policy changes. It also makes short- and long-run responses depend on the fiscal policy under study.

In certain reports and for some major pieces of legislation, CBO analyzes the short- and longer-term effects on the overall economy of changes in federal tax and spending policies. This report explains the methods that CBO uses.