Comments to OMB on the Proposed Revisions to Circular A-4
To the Office of Management and Budget on proposed revisions to Circular A-4.
Overview
OMB’s proposed revisions to Circular A-4 represent an essential and important step to update 20-year-old guidance. Much has changed in financial markets and in economic and scientific understanding in the past two decades, which merits updates to regulatory analysis—in particular regarding approaches to discounting. Discounting is the process of converting a value received in a future time period to an equivalent value received immediately. For more, see Prest (2020). Our comments below focus on three key issues that have been updated in the proposed revision to Circular A-4: (1) approaches to discounting; (2) the scope of analysis; and (3) the newly proposed approach to distributional weighting. We conclude by noting the important role of OMB guidance for ensuring analytical consistency across agencies.
