Methods for Analyzing the Economic Effects of Fiscal Policy Changes

CBO’s Director describes how expiring provisions of the 2017 tax act affect the agency’s baseline projections and reviews some information that has become available since CBO first estimated the effects of the tax act in April 2018.

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.