The study uses three different models to examine
the long-term effects: a closed- economy overlapping
generations (OLG) model; an open economy OLG model;
and the Ramsey model. The authors assume that the
tax cuts are financed with deficits for 10 years; then the
budget gaps are closed gradually with either by reductions
in government consumption or increases in tax rates. Thus,
deficits are allowed to build for the first decade of the tax
cut and much of the second decade as well.