Moonshot Projects

Next-generation research initiatives pushing the boundaries of economic modeling.

Dynamic Medicare

Medicare represents 15 percent of federal budget expenditures. Currently comparable in size to all nondefense discretionary spending combined, Medicare spending is projected to grow substantially as baby boomers retire. The program faces significant present value shortfalls absent general revenue transfers, payroll tax increases, or benefit reductions.

Unlike Social Security, which comprises nearly a quarter of the federal budget, Medicare modeling remains nascent, particularly regarding Medicare finances and economic relationships. Multiple unique modeling challenges exist. This initiative addresses this gap, enabling PWBM to evaluate substantial Medicare reforms, including transitions from its predominantly fee-for-service structure.

Aggregate OLG

Government projections typically incorporate recession risk as a simple "haircut" to expected GDP growth over the next decade. This approach generates considerable false precision and estimation error. Actual GDP fluctuates nonlinearly relative to deficit spending due to countercyclical policies at macroeconomic levels (tax cuts, spending programs) and microeconomic levels (unemployment insurance, welfare programs). The debt held by the public doubled between 2008 and 2012 due to the Great Recession.

The current OLG model allows idiosyncratic household-level shocks (microeconomic uncertainty) while maintaining deterministic GDP and factor prices (deterministic macroeconomics). Introducing macroeconomic uncertainty requires solving high-dimensional problems typically suited for quantum computing.

Using approximation methods with controllable error bounds, PWBM develops next-generation overlapping-generations models incorporating both macroeconomic and microeconomic uncertainty. This enables more accurate projection ranges and deeper program analysis, including unemployment insurance.