erp1997 appendixes 1

Appendix AREPORT TO THE PRESIDENT ON THE ACTIVITIES

OF THECOUNCIL OF ECONOMIC ADVISERS DURING 1996

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LETTER OF TRANSMITTAL

COUNCIL OF ECONOMIC ADVISERSWashington, D.C., December 31, 1996

MR. PRESIDENT:The Council of Economic Advisers submits this report on its

activities during the calendar year 1996 in accordance with therequirements of the Congress, as set forth in section 10(d) of theEmployment Act of 1946 as amended by the Full Employment andBalanced Growth Act of 1978.

Sincerely,Joseph E. Stiglitz, ChairmanAlicia H. Munnell, MemberJeffrey A. Frankel, Member-Nominee

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Council Members and their Dates of Service

Name

Edwin G NourseLeon H Keyserling

John D Clark

Roy BloughRobert C TurnerArthur F BurnsNeil H JacobyWalter W StewartRaymond J Saulnier

Joseph S DavisPaul W McCrackenKarl BrandtHenry C WallichWalter W HellerJames TobinHermit GordonGardner Ackley

John P LewisOtto EcksteinArthur M Okun

James S DuesenberryMertonJ PeckWarren L SmithPaul W McCrackenHendrik S HouthakkerHerbert Stein

Ezra SolomonMarina vN. WhitmanGary L SeeversWilliam J FellnerAlan GreenspanPaul W MacAvoyBurton G MalkielCharles L SchultzeWilliam D NordhausLyle E GramleyGeorge C EadsStephen M. GoldfeldMurray L WeidenbaumWilliam A Niskanen . . .Jerry L JordanMartin FeldsteinWilliam PooleBeryl W SprinkelThomas Gale MooreMichael L MussaMichael J Boskin .John B TaylorRichard L SchmalenseeDavid F BradfordPaul WonnacottAlan S. BlinderLaura D'Andrea TysonJoseph E Stiglitz

Martin N Baily . ..Alicia H. Munnell

Position

ChairmanVice ChairmanActing ChairmanChairmanMemberVice ChairmanMemberMemberChairmanMember .. ..MemberMemberChairmanMember . .MemberMemberMemberChairmanMemberMemberMemberChairmanMemberMemberMemberChairmanMemberMemberMemberChairmanMemberMemberChairmanMemberMemberMemberMemberChairmanMember .MemberChairmanMemberMemberMember . .MemberChairmanMemberMemberChairman

ChairmanMember . .MemberChairmanMemberMemberMemberMember . .MemberChair .Member .. .ChairmanMemberMember

Oath of office date

August 9 1946August 9 1946November 2, 1949May 10 1950August 9, 1946 ..May 10 1950June 29 1950September 8 1952March 19 1953September 15 1953December 2 1953April 4 1955December 3 1956May 2 1955December 3 1956November 1 1958May 7 1959January 29 1961January 29, 1961January 29 1961August 3 1962November 16 1964 . .. .May 17 1963September 2 1964November 16 1964 . .February 15, 1968February 2 1966February 15, 1968July 1 1968February 4 1969February 4 1969February 4 1969January 1, 1972September 9 1971March 13, 1972July 23 1973October 31, 1973September 4 1974June 13 1975July 22, 1975January 22 1977 . .. .March 18, 1977March 18, 1977June 6 1979August 20, 1980February 27, 1981June 12 1981July 14, 1981October 14 1982 .. ..December 10 1982April 18 1985July 1 1985August 18 1986February 2 1989June 9, 1989October 3 1989November 13 1991November 13 1991July 27, 1993Februarys 1993July 27 1993June 28, 1995June 30 1995January 29. 1996

Separation date

November 1 1949

January 20, 1953

February 11, 1953.August 20 1952January 20 1953December 1 1956February 9 1955April 29 1955

January 20 1961October 31 1958January 31, 1959January 20 1961January 20 1961November 15 1964July 31 1962.December 27 1962

February 15, 1968.August 31 1964February 1 1966

January 20, 1969.June 30 1968January 20, 1969January 20 1969December 31 1971July 15 1971

August 31, 1974.March 26 1973August 15, 1973.April 15 1975February 25, 1975.January 20 1977November 15 1976January 20, 1977.January 20 1981February 4, 1979.May 27 1980.January 20 1981January 20, 1981.August 25, 1982.March 30 1985July 31 1982.July 10 1984January 20 1985January 20 1989May 1 1989September 19 1988January 12 1993August 2 1991June 21 1991January 20 1993January 20 1993June 26 1994.April 22 1995

August 30 1996

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Report to the President on the Activities of theCouncil of Economic Advisers During 1996

The Council of Economic Advisers was established by the Em-ployment Act of 1946 to provide the President with objective eco-nomic analysis and advice on the development and implementationof a wide range of domestic and international economic policy is-sues.

The Chairman of the Council

Joseph E. Stiglitz, previously a Member of the Council, was ap-pointed Chairman on June 28, 1995. Dr. Stiglitz is on leave fromStanford University where he is the Joan Kenney Professor of Eco-nomics. Dr. Stiglitz is responsible for communicating the Council'sviews on economic matters directly to the President through per-sonal discussions and written reports. Dr. Stiglitz also representsthe Council at Cabinet meetings, meetings of the National Eco-nomic Council (NEC), daily White House senior staff meetings,budget team meetings with the President, and other formal and in-formal meetings with the President, senior White House staff, andother senior government officials. Dr. Stiglitz is the Council's chiefpublic spokesperson. He directs the work of the Council and exer-cises ultimate responsibility for the work of the professional staff.

The Members of the Council

Alicia H. Munnell is a Member of the Council. Dr. Munnell hadpreviously served in this Administration as Assistant Secretary forEconomic Policy at the Department of the Treasury. She also hadserved as Senior Vice President and Director of Research at theFederal Reserve Bank of Boston.

Martin N. Baily was a Member of the Council until August 1996.He left the Council to join the Global Institute at McKinsey andCompany, Inc. The President has nominated Jeffrey A. Frankel tosucceed Dr. Baily as a Member of the Council. While awaiting con-firmation, Dr. Frankel has been serving as Chief Economist. He ison leave from the University of California, Berkeley, where he isa Professor of Economics. He previously directed the program onInternational Finance and Macroeconomics at the National Bureau

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of Economic Research and is a former Senior Fellow at the Insti-tute for International Economics.

The Chair and Members work as a team on most economic policyissues. Dr. Munnell and Dr. Baily shared responsibility for domes-tic macroeconomic analysis, the Administration's economic forecast,and budget and tax issues. Dr. Munnell is primarily responsible forhealth care, welfare reform, environmental, and labor issues. Dr.Baily was primarily responsible for international economic issuesand certain microeconomic issues, including agriculture and the en-vironment. Dr. Frankel has taken over this portfolio. The Chairand the Council Members participate in the deliberations of theNEC. Dr. Stiglitz is a member of the NEC Principals Committee.

WEEKLY ECONOMIC BRIEFINGS

Dr. Stiglitz and the Members continued to conduct a weekly eco-nomic briefing for the President, the Vice President, and the Presi-dent's other senior economic and policy advisers. The Council, incooperation with the Office of the Vice President, prepares a writ-ten Weekly Economic Briefing of the President, which provides anal-ysis of current economic developments, more extended discussionsof a wide range of economic issues and problems, and summariesof economic developments in different regions and sectors of theeconomy. This document serves as a basis for the President's oralbriefing.

MACROECONOMIC POLICIES

A primary function of the Council is to advise the President onall major macroeconomic issues and developments. The Councilprepares for the President, the Vice President, and the WhiteHouse senior staff almost daily memoranda that report key eco-nomic data and analyze current macroeconomic events.

The Council, the Department of the Treasury, and the Office ofManagement and Budget—the Administration's economic "troi-ka"—are responsible for producing the economic forecasts that un-derlie the Administration's budget proposals. The Council, underthe leadership of the Members, initiates the forecasting processtwice each year. In preparing these forecasts, the Council consultswith a wide variety of outside sources, including leading privatesector forecasters.

In 1996 the Council continued to take part in discussions aboutthe President's balanced budget plan. The Council also participatedin meetings on a range of budget issues including Medicare andMedicaid, discretionary spending priorities, and the Administra-tion's tax proposals.

The Council, together with the Department of Labor, prepared areport titled "Job Creation and Employment Opportunities: TheUnited States Labor Market, 1993-1996," which analyzed the

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American economy's robust employment growth, the nature of thejobs being created, and the incidence of job displacement. This re-port concluded that over two-thirds (68 percent) of the net jobgrowth in full-time employment between February 1994 and Feb-ruary 1996 occurred in industry/occupation categories that paidabove-median wages. The Council also prepared a background re-port titled "Promoting Economic Growth," which discussed thechallenge of increasing the underlying productivity growth rate ofthe U.S. economy.

The Council continued its efforts to improve the public's under-standing of economic issues and the Administration's economicagenda through regular briefings with the economic and financialpress, frequent discussions with outside economists, and presen-tations to outside organizations.INTERNATIONAL ECONOMIC POLICIES

The Council has been an active participant in the internationaleconomic policymaking process through the National EconomicCouncil and the National Security Council, providing both technicaland analytic support and policy guidance. The Council engaged ininteragency discussions dealing with such topics as U.S. trade rem-edy laws (antidumping, countervailing duties, safeguards, and Sec-tion 301 actions); the U.S. balance of payments; cross-border in-vestment; international aspects of telecommunications and infor-mation technology; integrating Russia, China, and other newlymarket-oriented economies into the world economic order; and theagendas of multilateral and regional fora such as the World TradeOrganization, the Asia-Pacific Economic Cooperation forum, andthe North American Free Trade Agreement.

In 1996, Dr. Stiglitz led a U.S. delegation to the Information So-ciety and Development (ISAD) Conference in South Africa. TheISAD Conference, which followed the 1995 Gr-7 Ministerial Con-ference on the Information Society held in Brussels, was designedto extend acceptance of the Global Information Infrastructure prin-ciples, first articulated by the Vice President in 1994, to the devel-oping world. Dr. Stiglitz also led a U.S. delegation to China, wherehe met with top Chinese officials to initiate a dialogue on economicissues between the Council and China's State Planning Commis-sion. In addition, the Council drafted the 1996 APEC EconomicOutlook for the Asia-Pacific Economic Cooperation, and Dr. Stiglitzpresented this report to the APEC Ministers during their meetingsin Manila.

The Council plays a leading role in U.S. participation in the Or-ganization for Economic Cooperation and Development (OECD), theprincipal forum for economic cooperation among the high-incomeindustrialized countries. The Council heads the U.S. delegation tothe semiannual Economic Policy Committee (EPC) meetings, and

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Dr. Stiglitz is the Committee's Chairman. In that role, Dr. Stiglitzhas led an effort to make the EPC's meetings more relevant tomember-country policy discussions. Dr. Munnell led the U.S. dele-gation to the OECD's Working Party 1 on microeconomic and struc-tural issues and participated in Working Party 3. Dr. John D.Montgomery also participated in the OECD's Working Party 3 onmacroeconomic policy coordination, and Dr. Steven N. Braun ledthe U.S. delegation to the OECD's Short-term Economic Fore-casters Meeting.

MICROECONOMIC POLICIES

The Council was an active participant in discussions of micro-economic policy issues in 1996. Dr. Stiglitz is a member of the Ad-ministration's Regulatory Working Group and addressed numerousgroups on the principles, content, and importance of the Adminis-tration's regulatory reform program. At Dr. Stiglitz's initiative, theOECD has undertaken a series of studies to promote regulatory re-form around the globe. The Council also participated in a range ofAdministration efforts to reform regulation.

The Council was an active participant in the Administration's re-inventing government effort, which has made Federal Governmentagencies more efficient and more performance oriented and has re-vised and eliminated thousands of pages of regulations. To helppromote its objectives, the Council advocated procurement reformsthat would extend the use of competitive auctions by Federal agen-cies in their purchase of products and services.

The Council was involved in efforts to implement the 1996 tele-communications reform bill. The Council worked with the VicePresident, the National Economic Council, and the Departments ofJustice and Commerce to develop Administration policies regardinginterconnection of telephone competitors. Dr. Timothy J. Brennanparticipated in an economists' forum at the Federal Communica-tions Commission to examine various aspects of allowing local tele-phone companies to provide long-distance service. The Council alsopromoted participation in spectrum auctions held by the FederalCommunications Commission and played an important role in on-going efforts to restructure INTELSAT and Inmarsat (the inter-national satellite consortia).

The Council was active in a range of policy discussions on natu-ral resources and the environment. The Council has been a leadingproponent of reforming public lands policy, especially by reducingsubsidies for extractive use of Federal public lands. The Councilplayed a key role in the Headwaters acquisition negotiations andhas worked extensively on other land exchanges.

The Council participates actively in the ongoing assessment ofglobal climate change policies. The Council was also active in dis-cussions on the Superfund program and other issues relating to the

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management of hazardous wastes. The Council helped assess thereauthorization of the Clean Water Act and the Safe DrinkingWater Act and evaluated the drafts of the Environmental Protec-tion Agency's Mercury and Utility reports required by the CleanAir Act Amendments of 1994. In addition, the Council was involvedin the evaluation of alternative National Ambient Air QualityStandards for particulate matter and ozone, which are regulatedunder the Clean Air Act.

The Council played an important role in agricultural policy re-form, most notably the Administration's continuing efforts to imple-ment the 1996 Farm Act. The Council also advised on the operationof agricultural trade programs, including the sugar program andvarious farm export subsidy programs.

The Staff of the Council of Economic Advisers

The professional staff of the Council consists of the Chief of Staff,the Senior Statistician, 11 senior economists, 6 staff economists,and 3 research assistants. The professional staff and their areas ofconcentration at the end of 1996 were:

Chief of Staff and General Counsel

Michele M. Jolin

Senior Economists

S. Lael Brainard International Economics and Senior Directorat the National Economic Council

Steven N. Braun Director, Macroeconomic ForecastingTimothy J. Brennan Regulation, Industrial Organization, and

AntitrustWilliam B. English Macroeconomics and FinancePhillip B. Levine Labor, Welfare, and EducationMark J. Mazur Public Finance and Senior Director at the

National Economic CouncilJohn D. Montgomery International EconomicsRaymond Prince Environment and Natural ResourcesChristopher J. Ruhm Health Care, Aging, and LaborCharles F. Stone Macroeconomics and Editor, Weekly

Economic Briefing of the PresidentDavid L. Sunding Agriculture and Natural Resources

Senior Statistician

Catherine H. Furlong

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Staff Economists

Carrie S. Cihak International EconomicsJason L. Furman MacroeconomicsCynthia K. Gustafson Labor, Welfare, and EducationAndrea Richter International EconomicsCristian J. Santesteban Industrial Organization, Science and

Technology, and RegulationCaroline M. Thompson International Economics

Research Assistants

Jennifer C. DaskalSarah J. Reber

Diane M. Whitmore

Statistical Office

Mrs. Furlong directs the Statistical Office. The Statistical Officemaintains and updates the Council's statistical information, over-sees the publication of the Economic Indicators and the statisticalappendix to the Economic Report, and verifies statistics in Presi-dential and Council memoranda, testimony, and speeches.

Susan P. Clements Statistician and Information SystemsLinda A. Reilly Statistical AssistantBrian A. Amorosi Research AssistantMargaret L. Snyder Statistical Aide

The Administrative Office

Elizabeth A. Kaminski Administrative OfficerCatherine Fibich Administrative Assistant

Office of the Chairman

Alice H. Williams Executive Assistant to the ChairmanSandra F. Daigle Executive Assistant to the Chairman and

Assistant to the Chief of StaffLisa D. Branch Executive Assistant to Dr. MunnellFrancine P. Obermiller Executive Assistant to Dr. Frankel

Staff Secretaries

Mary E. JonesRosalind V. RasinMary A. Thomas

Mrs. Thomas also served as executive assistant for the WeeklyEconomic Briefing of the President.

Michael Treadway provided editorial assistance in the prepara-tion of the 1997 Economic Report. Robert E. Cumby, GeorgetownUniversity, David M. Cutler, Harvard University, and Michael A.

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Toman, Resources for the Future, served as consultants during theyear.

Student interns during the year were Oren Ahoobim, Anthony R.Alvarado, Noelle M. Campbell, Albert C. Chen, George L.Colindres, Mariano-Florentino Cuellar, Ariel S. Glasner, Kara A.Gobi, Minna J. Hahn, Mary K. Lesh, Robert P. Martin, Rachel A.Novak, Christopher J. O'Connor, Angela Sherry, Courtney A.Sweeney, Megan R. Sweeney, James R. Sweet, and Jose A. Villar.The following student interns joined the Council in January to as-sist with the preparation of the Economic Report: James T.Engelhardt, Gregory B. Garvin, and Laura M. Higginson.

DEPARTURES

Peter R. Orszag, who served as Senior Adviser to the Council, re-turned to the London School of Economics in November and hasnow joined the National Economic Council staff. The Council's sen-ior economists, in most cases, are on leave of absence from facultypositions at academic institutions or from other government agen-cies or research institutions. Their tenure with the Council is usu-ally limited to 1 or 2 years. Most of the senior economists who re-signed during the year returned to their previous affiliations. Theyare George B. Frisvold (Department of Agriculture), Thomas J.Kane (Kennedy School of Government, Harvard University), EileenMauskopf (Board of Governors of the Federal Reserve System),Robert G. Murphy (Boston College), Marius Schwartz (GeorgetownUniversity), and Michael A. Toman (Resources for the Future).Robert S. Dohner accepted a staff position with the Department ofthe Treasury. Louise M. Sheiner left the Council to serve as Dep-uty Assistant Secretary of the Treasury and has now rejoined theBoard of Governors of the Federal Reserve System.

Staff economists are generally graduate students who spend 1year with the Council and then return to complete their disserta-tions. Those who returned to their graduate studies in 1996 are Mi-chael A. Ash (University of California, Berkeley), Jonah B. Gelbach(Massachusetts Institute of Technology), and Scott J. Wallsten(Stanford University). Valerie A. Mercer accepted a position withthe International Monetary Fund. Ronald C. Chen began graduatestudies at Oxford University.

Public Information

The Council's Annual Report is the principal medium throughwhich the Council informs the public of its work and its views. Itis an important vehicle for presenting the Administration's domes-tic and international economic policies. Annual distribution of theReport in recent years has averaged about 45,000 copies. TheCouncil also has primary responsibility for compiling the monthly

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Economic Indicators, which is issued by the Joint Economic Com-mittee of the Congress and has a monthly distribution of approxi-mately 10,000.

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erp1997 appendixes 1

Documents