[Always Right]

"We assume that the monetary authorities do not accommodate the adoption of the FairTax, which is to say that they restrain the growth of the money supply sufficiently to prevent market prices from rising. As mentioned, this is merely a simplifying assumption. We could just as well have allowed for monetary accommodation, so that there would be no fall in producer prices under the FairTax."

Maybe I am missing something, but that seems to be the identical assumption that Jorgenson made, except Jorgenson assumed after tax prices would stay the same due to lowering wages, and Kotlikoff assumed that he would keep after tax prices constant by monetary policy (which I suppose in the long run could force wages down, but again is a unrealistic assumption). In the short run that kind of monetary policy would destroy the economy before the wage-issue was rung out.

[pigdog]

Indeed, maybe you ARE missing something. Quite a bit in fact. Try again ... or even try studying what the entire paper says.