# Federal Government Budget

## Changes to the FRB/US Model

- The consolidation of a large set of federal and S&L variables has led to the simplifcation of the federal government’s budget equations.

GFSRPN: Federal government budget surplus, current $
Old model

    gfsrpn - gfsrpn_aerr = tfpn + tfcin
     + tfibn + tfsin + tfdiv
     - egfln - egfon - gftn - gfintn
     - gfsubn - gfsn

New model

    gfsrpn - gfsrpn_aerr = tpn + tcin
     - egfln - 0.64*egfen - gtn - gfintn
     + ugfsrp*xgdpn

GFDBTN: Federal government debt stock, current $
Old model

    gfdbtn - gfdbtn_aerr = ugfdbt*(gfdbtn(-1)
     - .25*gfsrpn + .25*egfin
     - .25*jygfgn - .25*jygfen)

New model

    gfdbtn - gfdbtn_aerr = ugfdbt*(gfdbtn(-1)
     - .25*(gfsrpn - 0.36*egfen))

- New auxiliary variables were created to facilitates the automation and derivations of linearized versions of the FRB/US model.

GFEXPN: Sum of positive terms in the federal surplus identity, current $
New model

    gfexpn - gfexpn_aerr = egfln + 0.64*egfen + gtn + gfintn

GFRECN: Sum of negative terms in the federal surplus identity (sign reversed), current $
New model

    gfrecn - gfrecn_aerr = tpn + tcin + ugfsrp*xgdpn

## Some details about the changes and simplifications

- The following variables were eliminated from the model.

  - GFS: Federal government grants-in-aid to S&L government, deflated by PGDP
  - GFSN: Federal government grants-in-aid to S&L government, current $
  - GFSUB: Federal government subsidies less surplus, deflated by PGDP
  - GFSUBN: Federal government subsidies less surplus, current $
  - GSSUB: S&L government subsidies less surplus, deflated by PGDP
  - GSSUBN: S&L government subsidies less surplus, current $