Department of Economics
Building 130 FOB
Brigham Young University
Provo, UT 84602
Tel: 801/378-5928 phone
Institutional Affiliation: Congressional Budget Office
Information about this author at RePEc
NBER Working Papers and Publications
|May 2014||A Big Data Approach to Optimal Sales Taxation|
with Christian Baker, Jeremy Bejarano, Richard W. Evans, Kenneth L. Judd: w20130
We characterize and demonstrate a solution method for an optimal commodity (sales) tax problem consisting of multiple goods, heterogeneous agents, and a nonconvex policy maker optimization problem. Our approach allows for more dimensions of heterogeneity than has been previously possible, incorporates potential model uncertainty and policy objective uncertainty, and relaxes some of the assumptions in the previous literature that were necessary to generate a convex optimization problem for the policy maker. Our solution technique involves creating a large database of optimal responses by different individuals for different policy parameters and using "Big Data" techniques to compute policy maker objective values over these individuals. We calibrate our model to the United States and test th...
|March 2012||Game Over: Simulating Unsustainable Fiscal Policy|
with Richard W. Evans, Laurence J. Kotlikoff: w17917
Fiscal sustainability is one of the most pressing policy issues of our time. Yet it remains difficult to quantify. Official debt is plagued with a number of measurement difficulties since its measurement reflects the choice of words, not policies. And forming the fiscal gap-the imbalance in the government's intertemporal budget-requires strong discount rate assumptions. An alternative approach, taken here, is specifying a stochastic general equilibrium model and determining via simulation how long it takes for the economy to reach game over-the point where current policy can no longer be maintained. Our simulations, based on an OLG model calibrated to the U.S. economy, produce an average duration to game over of roughly one century, with a 35 percent chance of reaching the fiscal limit in ...
|February 2012||Game Over: Simulating Unsustainable Fiscal Policy|
with Richard W. Evans, Laurence J. Kotlikoff
in Fiscal Policy after the Financial Crisis, Alberto Alesina and Francesco Giavazzi, editors
This chapter uses a stochastic general equilibrium model to determine how long it takes for unsustainable fiscal policy to produce game over--the point where the policies can no longer be maintained. When the economy reaches game over, the government is forced to default on its promised payment to the contemporaneous elderly.