ERP1998 Appendixes 1

Appendix AREPORT TO THE PRESIDENT ON THE ACTIVITIES

OF THECOUNCIL OF ECONOMIC ADVISERS DURING 1997

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

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

LETTER OF TRANSMITTAL

COUNCIL OF ECONOMIC ADVISERSWashington, D. C., December 31, 1997

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

ties during the calendar year 1997 in accordance with the require-ments of the Congress, as set forth in section 10(d) of the EmploymentAct of 1946 as amended by the Full Employment and BalancedGrowth Act of 1978.

Sincerely,Janet L. Yellen, ChairJeffrey A. Frankel, MemberRebecca M. Blank, Member-Nominee

263Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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 TobinKermit GordonGardner Ackley

John P LewisOtto EcksteinArthur M.Okun

James S DuesenberryMertonJ PeckWarren L SmithPaulW McCrackenHendrikS HouthakkerHerbert Stein

Ezra SolomonMarina v.N. WhitmanGary L SeeversWilliam J FellnerAlan GreenspanPaul W. MacAvoyBurton G MalkielCharles L SchultzeWilliam D NordhausLyle E. GramleyGeorge C EadsStephen M. GoldfeldMurray L WeidenbaumWilliam A. NiskanenJerry L JordanMartin FeldsteinWilliam PooleBeryl W SprinkelThomas Gale MooreMichael L MussaMichael J BoskinJohn B.TaylorRichard L SchmalenseeDavid F BradfordPaul WonnacottLaura D'Andrea TysonAlan S BlinderJoseph E Stiglitz

Martin N BailyAlicia H MunnellJanet L YellenJeffrey A Frankel

Position

ChairmanVice ChairmanActing ChairmanChairmanMemberVice ChairmanMember .MemberChairmanMember .MemberMemberChairmanMemberMemberMemberMemberChairmanMemberMemberMemberChairmanMemberMemberMemberChairmanMemberMemberMemberChairmanMemberMemberChairmanMemberMemberMemberMemberChairmanMemberMemberChairmanMemberMemberMemberMemberChairmanMemberMemberChairmanMemberChairmanMemberMemberChairmanMemberMemberMemberMemberChairMemberMemberChairmanMemberMemberChair . .. .Member

Oath of office date

August 9, 1946 .August 9, 1946November 2 1949May 10, 1950August 9, 1946May 10 1950June 29, 1950September 8, 1952March 19 1953September^ 1953December 2, 1953April 4 1955Decembers 1956May 2, 1955December 3, 1956November 1 1958May 7, 1959January 29, 1961January 29 1961January 29 1961August 3, 1962November 16, 1964May 17 1963September 2 1964November 16, 1964February 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, 1977March 18 1977March 18, 1977June 6, 1979August 20, 1980February 27 1981June 12, 1981July 14, 1981October 14 1982December 10, 1982April 18 1985July 1, 1985August 18, 1986February 2, 1989June 9, 1989Octobers 1989Novemberl3 1991November 13, 1991February 5, 1993July 27 1993July 27, 1993June 28, 1995June 30 1995January 29 1996February 18 1997April 23, 1997

Separation date

November 1 1949

January 20 1953

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

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

February 15, 1968.August 31 1964February 1, 1966.

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

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

February 10, 1997.August 30 1996August 1 1997


Report to the President on the Activities of theCouncil of Economic Advisers During 1997

The Council of Economic Advisers was established by the Employ-ment Act of 1946 to provide the President with objective economicanalysis and advice on the development and implementation of a widerange of domestic and international economic policy issues.

The Chair of the Council

Janet L. Yellen was appointed Chair on February 18,1997. Dr. Yellenreplaced Joseph E. Stiglitz, who left the Council to become Senior VicePresident of Development Economics and Chief Economist of the WorldBank. Before becoming Chair of the Council, Dr. Yellen served as aMember of the Board of Governors of the Federal Reserve System. Dr.Yellen is on leave from the Haas School of Business at the University ofCalifornia, Berkeley, where she is the Bernard T. Rocca, Jr. Professor ofInternational Business and Trade. Dr. Yellen is responsible for commu-nicating the Council's views on economic matters directly to the Presi-dent through personal discussions and written reports. Dr. Yellen alsorepresents the Council at Cabinet meetings, meetings of the NationalEconomic Council (NEC), daily White House senior staff meetings,budget team meetings with the President, and other formal and infor-mal meetings with the President, senior White House staff, and othersenior government officials. Dr. Yellen is the Council's chief publicspokesperson. She directs the work of the Council and exercises ulti-mate responsibility for the work of the professional staff.

The Members of the Council

Jeffrey A. Frankel is a Member of the Council of Economic Advisers.Dr. Frankel is on leave from the University of California, Berkeley,where he is Professor of Economics. He previously directed the pro-gram on International Finance and Macroeconomics at the NationalBureau of Economic Research and is a former Senior Fellow at theInstitute for International Economics.

Alicia H. Munnell was a Member of the Council of Economic Advis-ers until August 1997. Dr. Munnell currently holds the Peter F. Druck-er Chair in Management Sciences at Boston College's Carroll School ofManagement. The President has nominated Rebecca M. Blank to suc-


ceed Dr. Munnell as a Member of the Council. While awaiting confir-mation, Dr. Blank has been serving as Chief Economist. She is onleave from Northwestern University, where she is Professor of Eco-nomics. Dr. Blank previously served as the first Director of the North-western University/University of Chicago Joint Center for PovertyResearch and was a faculty affiliate at Northwestern University'sInstitute for Policy Research.

The Chair and Members work as a team on most economic policyissues. Dr. Frankel and Dr. Munnell shared responsibility for domes-tic macroeconomic analysis, the Administration's economic forecast,and budget and tax issues. Dr. Frankel is primarily responsible forinternational economic issues and certain microeconomic issues,including those relating to natural resources, the environment, andindustrial organization. Dr. Munnell was primarily responsible forretirement, health care, welfare reform, and labor issues. Dr. Blankhas taken over responsibility for these issues. She is also responsiblefor child and family policy issues and is working closely with the Pres-ident's Initiative on Race. The Chair and Members participate in thedeliberations of the NEC, and Dr. Yellen is a member of the NEC Prin-cipals Committee.

WEEKLY ECONOMIC BRIEFINGS

Dr. Yellen and the Members continued during 1997 to conduct aweekly economic briefing for the President, the Vice President, andthe President's other senior economic and policy advisers. The Coun-cil, in cooperation with the Office of the Vice President, prepares awritten Weekly Economic Briefing of the President, which providesanalysis of current economic developments, more extended discus-sions of a wide range of economic issues and problems, and summariesof economic developments in different regions and sectors of the econ-omy. This document serves as a basis for the oral economic briefing ofthe President.

MACROECONOMIC POLICIES

A primary function of the Council is to advise the President on allmajor macroeconomic issues and developments. The Council preparesfor the President, the Vice President, and the White House senior staffalmost daily memoranda that report key economic data and analyzecurrent economic events.

The Council, the Department of the Treasury, and the Office ofManagement and Budget—the Administration's economic "troika"—are responsible for producing the economic forecast that underlies theAdministration's budget proposals. The Council, under the leadershipof the Members, initiates the forecasting process twice each year. Inpreparing these forecasts, the Council consults with a variety of out-side sources, including leading private sector forecasters.


In 1997 the Council continued to take part in discussions about thePresident's balanced budget plan. The Council also participated in meet-ings on a range of budget issues including Medicare reform, discre-tionary spending priorities, and the Administration's tax proposals. TheCouncil participated in discussions regarding proposals to strengthenthe Social Security system, and in an interagency effort to develop apackage of proposed reforms to the private pension system to promotehigher rates of national saving and greater retirement security.

The Council participates in the Working Group on Financial Mar-kets, an interagency group that monitors developments related tofinancial markets and the banking sector. The group includes repre-sentatives from the Treasury, the Federal Reserve, the NEC, and var-ious regulatory agencies.

The Council continued its efforts to improve the public's under-standing of economic issues and the Administration's economic agendathrough regular briefings with the economic and financial press, fre-quent discussions with outside economists, and presentations to out-side organizations. Drs. Yellen, Frankel, Munnell, and Blank also reg-ularly exchanged views on the macroeconomy with the Chairman andMembers of the Board of Governors of the Federal Reserve System.

INTERNATIONAL ECONOMIC POLICIES

The Council was an active participant in 1997 in the internationaleconomic policymaking process through the NEC and the NationalSecurity Council, providing both technical and analytical support andpolicy guidance. In particular, the Council has helped assess the eco-nomic impact of international sanctions against foreign nations, andthe efficacy of relaxing restrictions in the U.S.-Japan civil aviationmarket. The Council has taken an active role on a range of other inter-national economic issues, including evaluating and explaining thecase for trade liberalization, the Administration's policy approach toAsia's financial turmoil, U.S. trade remedy laws (antidumping, coun-tervailing duties, safeguards, and Section 301 actions), and the agen-das of multilateral and regional forums such as the World Trade Orga-nization, the Asia-Pacific Economic Cooperation forum, and theproposed Free Trade Area of the Americas.

The Council played a significant role in preparing both the Admin-istration's 1997 Study on the Operation and Effects of the North Amer-ican Free Trade Agreement and the 1997 APEC Economic Outlook.The Weekly Economic Briefing of the President also regularly includedarticles on international events and issues.

Because of the growing importance of international economic issuesto the U.S. economy, the Council often represents the United States atinternational meetings and forums. In November Dr. Yellen gave thekeynote address at the U.S.-R.O.C. Economic Council Plenary Session.Also in November Dr. Frankel participated in the annual meeting of


the APEC Senior Economic Advisers, a meeting initiated in 1996 bythe Council during the APEC Leaders Summit. At this meeting Dr.Frankel presented a Council paper on the long-term determinants ofgrowth. In December Dr. Frankel participated in the Joint EconomicDevelopment Group with Israel. The Council also continued annualmeetings with the Economic Planning Agency of Japan and the StatePlanning Commission of China, the Council's counterparts in thosecountries.

The Council is a leading U.S. participant in the Organization forEconomic Cooperation and Development (OECD), the principal forumfor economic cooperation among the high-income industrial countries.The Council heads the U.S. delegation to the semiannual meetings ofthe OECD's Economic Policy Committee; Dr. Yellen serves as thatcommittee's chair. In 1997 Dr. Frankel participated in Working Party3 on macroeconomic policy coordination. Dr. Steven N. Braun, Direc-tor, Macroeconomic Forecasting at the Council, led the U.S. delegationto the OECD annual examination of the United States, and to theShort-term Economic Forecasters' Meeting. Dr. Christopher Carroll,Senior Economist at the Council, led the U.S. delegation to the Work-ing Party 1 meeting on structural issues.

MICROECONOMIC POLICIES

During 1997 the Council was an active participant in a range ofmicroeconomic policy discussions. The Council participated in variousinteragency policy discussions on labor market issues, health care,education, child care, and welfare reform; in the development of theChild Health Insurance Program; in interagency discussions of pro-posals to increase health insurance coverage for older workers; and ina working group investigating alternative measures of poverty. TheCouncil also participated in working groups on the minimum wage,training initiatives for displaced workers, and unemployment insur-ance reform.

The Council has been actively involved in the President's Initiativeon Race and is coordinating production of a document that will pre-sent important indicators of social and economic well-being by raceand ethnicity for use by a national audience including educators andpolicymakers.

In May the Council issued a report titled Explaining the Decline inWelfare Receipt, 1993 to 1996. The report examined the causes of the20-percent decline (2.75 million recipients) in the welfare caseloadthat took place between 1993 and 1996 and concluded that roughly 40percent of the decline was due to the stronger economy, roughly 30percent to welfare reform policies, and the remainder to other factorssuch as the earned income tax credit.

The Council was involved in White House conferences on early child-hood development and child care. In conjunction with the early child-


hood development conference, the Council released a white paper titledThe First Three Years: Investments That Pay. This report documentedthe importance of programs to encourage children's development in thefirst 3 years of life and the high long-term payoff of such investments.

As a follow-up to the White House child care conference, the Coun-cil issued a report titled The Economics of Child Care. This reportreviewed the economics literature regarding the availability, cost, andquality of child care and the importance of policies to support access toaffordable, quality care.

In the areas of regulation and competition policy, the Council helpeddevelop important Administration initiatives to improve the perfor-mance of markets, both domestically and internationally. On thedomestic front the Council took part in interagency efforts to increasecompetition in electric power markets in a manner consistent withimportant environmental and social objectives. The Council con-tributed to the Administration's analysis of whether and how much toreform product liability law, and to discussions of the Federal Com-munications Commission's methods for pricing telecommunicationsservices. The Council also worked with the Federal Trade Commis-sion, the Department of Justice, and the Department of the Treasuryto consider questions raised by the proposed industry-wide tobaccosettlement. In addition, the Council worked with the Treasury, theDepartment of Education, and the Office of Management and Budgetto develop reforms of the college financial aid system to make it fairerand more efficient.

With respect to international regulation and competition policy, theCouncil cooperated with the Department of State and other agenciesto bring more competition to the satellite communications industry, tosupport the OECD's adoption of principles for economically sound reg-ulation, to promote efficient infrastructure development in the Asia-Pacific region, and to coordinate merger policy with the EuropeanUnion.

The Council was also active in a range of policy discussions on nat-ural resources and the environment. The Council took part in theinteragency evaluation of National Ambient Air Quality Standards forozone and particulate matter under the Clean Air Act and the imple-mentation plans for the revised standards. The Council was activelyinvolved in the development and analysis of the Administration's glob-al climate change policy.

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, 5 staff economists, and 3research assistants. The professional staff and their areas of concen-tration at the end of 1997 were:


Chief of Staff and General Counsel

Michele M. Jolin

Senior Economists

Steven N. Braun Director, Macroeconomic ForecastingChristopher D. Carroll Macroeconomics and AgingAaron S. Edlin Regulation, Industrial Organization, and

AntitrustKeith O. Fuglie Agriculture and Natural ResourcesMaria J. Hanratty Health Care and LaborJon D. Haveman International EconomicsSanders D. Korenman Labor, Welfare, and EducationRandall W. Lutter Regulation and EnvironmentAdele C. Morris Environment and Natural ResourcesJeremy B, Rudd MacroeconomicsCharles F. Stone Macroeconomics and Editor, Weekly

Economic Briefing of the President

Senior Statistician

Catherine H. Furlong

Staff Economists

Joseph E. Aldy Environment and Natural ResourcesAmy N. Finkelstein Labor and Public FinanceMark R. Hopkins International EconomicsMark C. Rainey Industrial Organization and RegulationSarah J. Reber Health Care and Environment

Senior Research Assistant

Ha Yan Lee Macroeconomics

Research Assistants

Zachary M. Candelario Weekly Economic Briefing of the President,Labor, and Environment

Daniel K. Chang Weekly Economic Briefing of the Presidentand International Economics

Statistical Office

Mrs. Furlong directs the Statistical Office. The Statistical Officemaintains and updates the Council's statistical information, overseesthe publication of the monthly Economic Indicators and the statisticalappendix to the Economic Report, and verifies statistics in Presiden-tial and Council memoranda, testimony, and speeches.


Susan P. Clements StatisticianLinda A. Reilly StatisticianBrian A. Amorosi Research Assistant

Administrative Officer

Catherine Fibich

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. FrankelFrancine P. Obermiller Executive Assistant to Dr. Blank

Staff Secretaries

Mary E. Jones International Economics, Labor, andHealth Care

Rosalind V. Rasin Environment, Industrial Organization, andPublic Finance

Mary A. Thomas Macroeconomics

Mrs. Thomas also served as executive assistant for the Weekly Eco-nomic Briefing of the President.

Michael Treadway provided editorial assistance in the preparationof the 1997 Economic Report. Michael A. Toman, Resources for theFuture, served as a consultant during the year.

Student interns during the year were Aryeh J. Asian, Elizabeth T.Burns, Carol L. Capece, Quindi C. Franco, Robert K. Kaproth, MarkN. Levine, Jennifer A. Meyers, Andrew J. Miller, Praveen Rangnath,Katharine S. Rogers, Ravi K. Sandill, Kristen M. Scarafia, CourtneyA. Sweeney, Harsh N. Trivedi, and Jennifer H. Yoon. The followingstudent interns joined the Council in January to assist with the prepa-ration of the Economic Report: Keith H. Monk, Jenny E. Pippin, andSamuel G. Steckley.

DEPARTURES

The Council's senior economists, in most cases, are on leave ofabsence from faculty positions at academic institutions or from othergovernment agencies or research institutions. Their tenure with theCouncil is usually limited to 1 or 2 years. Most of the senior econo-mists who left the Council during 1997 returned to their previous affil-iations. They are Timothy J. Brennan (University of Maryland, Balti-more County, and Resources for the Future), William B. English(Board of Governors of the Federal Reserve System), Phillip B. Levine(Wellesley College), John D. Montgomery (International Monetary


Fund), Raymond Prince (Department of Energy), Christopher J.Ruhm (University of North Carolina, Greensboro), Jason F. Shogren(University of Wyoming), and David L. Sunding (University of Cali-fornia, Berkeley). Mark J. Mazur became Senior Policy Adviser andChief Economist at the Department of Energy.

Staff economists are generally graduate students who spend 1 yearwith the Council and then return to complete their dissertations.Those who returned to their graduate studies in 1997 are Carrie S.Cihak (University of Michigan), Cynthia K. Gustafson (University ofCalifornia, Berkeley), Andrea Richter (London School of Economics),Cristian J. Santesteban (Stanford University), and Caroline M.Thompson (Princeton University). Jason L. Furman accepted a posi-tion with the World Bank. Thomas A. Rhoads accepted a position withResources for the Future and has since returned to graduate studiesat the University of Wyoming. After serving as research assistants atthe Council, Jennifer C. Daskal accepted a position at the Center onBudget and Policy Priorities, and Diane M. Whitmore began graduatestudies at Princeton University.

Elizabeth A. Kaminski and Margaret L. Snyder retired in 1997after serving the Council for 32 and 36 years, respectively. Mrs.Kaminski served most recently as Administrative Officer, and Mrs.Snyder retired from the Statistical Office.

Public Information

The Council's Annual Report is an important vehicle for presentingthe Administration's domestic and international economic policies. Itis now available for distribution as a bound volume, on CD-ROM, andon the Internet, where it is accessible at http://www.access.gpo.gov/eop.The Council also has primary responsibility for compiling the month-ly Economic Indicators, which is issued by the Joint Economic Com-mittee of the Congress. The Internet address for the Economic Indi-cators is www.access.gpo.gov/congress/cong002.html.


ERP1998 Appendixes 1

Documents

Transcript of ERP1998 Appendixes 1