Assessing the Budgetary Implications of Economic Uncertainty With CBO’s Incomes Model and Budgetary Feedback Model

This report outlines the models the CBO uses to assess the budgetary effects of several economic scenarios. The CBO’s analysis of economic uncertainty was conducted in three main steps, with 100 simulations of the rates of unemployment, inflation, and interest jointly estimated around the central estimates. It estimated forecasts conditional on those rates. It estimated forecasts conditional on those rates using symmetric distributions.

This document focuses on how CBO assessed their implications for the federal budget.