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Key Methods That CBO Used to Estimate the Macroeconomic Effects of the 2025 Reconciliation Act: Working Paper 2026-01

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  • Congressional Budget Office

Abstract

Public Law 119-21, referred to here as the 2025 reconciliation act, included a wide range of provisions that affect policies governing federal revenues and spending. This paper describes the key methods that the Congressional Budget Office used to estimate the law's macroeconomic effects. For each of the law's provisions, CBO identified key channels through which the U.S. economy would be affected and then translated those effects into inputs for its analytical models. For cases in which those inputs could be incorporated into CBO's existing modeling

Suggested Citation

  • Congressional Budget Office, 2026. "Key Methods That CBO Used to Estimate the Macroeconomic Effects of the 2025 Reconciliation Act: Working Paper 2026-01," Working Papers 61257, Congressional Budget Office.
    • Handle: RePEc:cbo:wpaper:61257
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    File URL: https://www.cbo.gov/system/files/2026-02/61257-KeyMethods.pdf
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    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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