Monday, May 15, 2006

Dynamic Scoring

In today's Washington Post, columnist Sebastian Mallaby gives my recent work with Matthew Weinzierl on dynamic scoring some free publicity, while using it to beat up my former boss.

Here is the abstract of the Mankiw-Weinzierl paper:

This paper uses the neoclassical growth model to examine the extent to which a tax cut pays for itself through higher economic growth. The model yields simple expressions for the steady-state feedback effect of a tax cut. The feedback is surprisingly large: for standard parameter values, half of a capital tax cut is self-financing. The paper considers various generalizations of the basic model, including elastic labor supply, general production technologies, departures from infinite horizons, and non-neoclassical production settings. It also examines how the steady-state results are modified when one considers the transition path to the steady state.
The article is forthcoming in the Journal of Public Economics. A nontechnical summary is available here.