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Fair-Value Cost Estimation and Government Cash Flows: Working Paper 2021-05

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  • Michael Falkenheim

Abstract

Under current law, federal agencies estimate the budgetary costs of loans and loan guarantees using the projected yields on Treasury securities to discount future cash flows to the present. That approach recognizes costs when loans originate instead of when cash flows occur, the approach agencies use to account for most other items in the federal budget. Agencies project the future cash flows of loans and loan guarantees as the average of their possible values, weighting different outcomes by their probability. Fair-value budgeting—an alternative to the approach used under

Suggested Citation

  • Michael Falkenheim, 2021. "Fair-Value Cost Estimation and Government Cash Flows: Working Paper 2021-05," Working Papers 57062, Congressional Budget Office.
    • Handle: RePEc:cbo:wpaper:57062
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    File URL: https://www.cbo.gov/system/files/2021-04/57062-Fair-Value-Budgeting.pdf
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    More about this item

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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