erp1994 appendixes 1

Appendix AREPORT TO THE PRESIDENT ON THE ACTIVITIES

OF THECOUNCIL OF ECONOMIC ADVISERS DURING 1993

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

LETTER OF TRANSMITTAL

COUNCIL OF ECONOMIC ADVISERSWashington, B.C., December 31, 1993

MR. PRESIDENT:

The Council of Economic Advisers submits this report on itsactivities during the calendar year 1993 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,

Laura D'Andrea Tyson, ChairAlan S. Blinder, MemberJoseph E. Stiglitz, Member

251Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Council Members and their Dates of Service

Name

idwin G NourseLeon H. Keyserling

John D. Clark

Roy BlcughRobert C. Turner\rthur 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. DuesenberryMerton J. PeckWarren L SmithPaul W. McCrackenHendrik S. HouthakkerHerbert Stein

Ezra SoiomonMarina 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

Position

ChairmanVice ChairmanActing ChairmanChairmanMemberVice ChairmanMemberMemberChairmanMemberMemberMemberChairmanMemberMemberMemberMemberChairmanMemberMemberMemberChairmanMemberMemberMemberChairmanMemberMemberMemberChairmanMemberMemberChairmanMemberMemberMemberMemberChairmanMemberMemberChairmanMemberMemberMemberMemberChairmanMemberMemberChairmanMemberChairmanMemberMemberChairmanMemberMemberMemberMemberChairMemberMember

Oath of office date

August 9, 1946August 9, 1946November 2, 1949May 10, 1950August 9, 1946May 10, 1950June 29, 1950September8, 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, 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, 1989October 3, 1989November 13, 1991November 13, 1991February 5, 1993July 27, 1993July 27, 1993

Separation date

November 1, 1949.

January 20, 1953.

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

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

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

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

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


Report to the President on the Activities of theCouncil of Economic Advisers During 1993

The Statutory Mission of the Council

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 Chair of the Council

The inauguration of President Clinton brought changes to themembership of the Council of Economic Advisers. In February1993, Laura D'Andrea Tyson was appointed Chair of the Counciland a Member of the President's Cabinet. Dr. Tyson is on leavefrom the University of California, Berkeley, where she is Professorof Economics and Business Administration and Research Directorof the Berkeley Roundtable on the International Economy. AsChair of the Council, Dr. Tyson is responsible for communicatingthe Council's views on economic developments to the Presidentthrough personal discussions and written reports. She is the Coun-cil's chief public spokesperson.

Dr. Tyson represents the Council at Cabinet meetings and var-ious other high-level meetings including those of the National Secu-rity Council focusing on economic issues, daily White House seniorstaff meetings, budget team meetings with the President, andmany other formal and informal meetings with the President, sen-ior White House staff, and other senior government officials.Dr. Tyson is one of six members of the Principals Committee of thenewly established National Economic Council and is a member ofthe Domestic Policy Council. She guides the work of the Council ofEconomic Advisers and exercises ultimate responsibility for thework of the professional staff. Dr. Tyson succeeded Michael J.Boskin, who returned to Stanford University, where he is theFriedman Professor of Economics; he is also a Senior Fellow at theHoover Institution on War, Revolution and Peace.

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The Members of the Council

Alan S. Blinder and Joseph E. Stiglitz are the other new Mem-bers of the Council of Economic Advisers. They succeeded PaulWonnacott, who is now a Senior Fellow at the Institute for Inter-national Economics, and David F. Bradford, who returned toPrinceton University. Dr. Blinder is on leave from Princeton Uni-versity where he is the Gordon S. Rentschler Memorial Professorof Economics. Dr. Stiglitz is on leave from Stanford Universitywhere he is the Joan Kenney Professor of Economics. Members ofthe Council are involved in the full range of issues within theCouncil's purview and are responsible for the daily supervision ofthe work of the professional staff. Members represent the Councilat a wide variety of interagency and international meetings and as-sume mgyor responsibility for selecting issues for the Council's at-tention.

The small size of the Council permits the Chair and Members towork as a team on most policy issues. The Chair works on thewhole range of economic issues under the Council's purview. Therecontinues to be, however, an informal division of subject matteramong the Members. Dr. Stiglitz is primarily responsible for micro-economic and sectoral analysis and regulatory issues. Dr. Blinderis primarily responsible for domestic and international macro-economic analysis and economic projections. All three Members,under Dr. Tyson's lead, are heavily involved in international tradeissues and participate in the deliberations of the National Eco-nomic Council.MACROECONOMIC POLICIES

The Council advised the President on all major macroeconomicissues in 1993. The Council prepared for the President, the VicePresident, and the White House senior staff a comprehensive seriesof memoranda on the statistical releases that help monitor U.S.economic activity. It also prepared special analyses of economic pol-icy issues and briefing papers on significant economic events, suchas the 1993 floods in the Midwest (and the earthquake in southernCalifornia early in 1994).

The Council participated in discussions of macroeconomic policyissues with officials from the Department of the Treasury, the Of-fice of Management and Budget (OMB), and other members of thePresident's economic policy team. It was a leading participant inthe formulation of the Administration's economic policies throughvarious Cabinet and sub-Cabinet working groups. The Council alsoplayed an important role in setting priorities within the fiscal 1994and 1995 budgets.

The Council analyzed the macroeconomic effects of all major Ad-ministration policy proposals, including the President's deficit re-


duction budget package, the North American Free Trade Agree-ment, and the Uruguay Round of the General Agreement on Tariffsand Trade (GATT). In addition, the Council carefully monitored theresponse of the interest-sensitive sectors of the economy to thesharp reduction in long-term interest rates that followed the pro-posal and enactment of the President's deficit reduction plan.

The Council, the Department of the Treasury, and the OMB—theeconomic "Troika"—produced the economic forecasts that underliethe Administration's budget projections. Dr. Blinder, in collabora-tion with Dr. Tyson and Council senior economists, led this fore-casting effort. Two official forecasts are released each year. Thefirst is published early in the year and is relied upon for the Presi-dent's budget calculations. An update is then published in the sum-mer as part of the Administration's mid-session budget review. Inpreparing its forecasts, the Troika took particular care to presenteconomic assumptions that were not unduly optimistic so as tomaintain the credibility of the Administration's budget projectionsand its economic plan. Leading private sector forecasters visitedthe Council before the forecasting rounds to share their views onthe economic outlook.

The Council worked to improve the public's understanding of eco-nomic issues and the quality of economic information through regu-lar briefings with the White House financial and general presscorps, periodic discussions with distinguished outside economists,and meetings with leading business executives. The Chair and theother Members made numerous presentations to outside organiza-tions to explain the Administration's economic strategy and poli-cies. Dr. Tyson, Dr. Blinder, and Dr. Stiglitz regularly exchangedinformation and met with the Chairman and Members of the Boardof Governors of the Federal Reserve System to discuss the economicoutlook and monetary policy.

Finally, the Council worked to improve the quality of governmenteconomic statistics. The Council urged increased funding for eco-nomic and demographic statistics in interagency discussions and indeliberations over Federal budget priorities.

INTERNATIONAL ECONOMIC POLICIES

International economic issues were a high priority for the Coun-cil in 1993. All three Members continued the Council's active rolein the Organization of Economic Cooperation and Development(OECD). Dr. Tyson attended the OECD's Economic Policy Commit-tee meeting in Paris in May and served as its Acting Chair in No-vember. Dr. Blinder led the U.S. delegation to the OECD to assessU.S. economic policy and was a member of the U.S. delegation toOECD Working Party 3 on macroeconomic policy coordination.Dr. Stiglitz headed the U.S. delegation to OECD Working Party 1meetings on microeconomic and structural issues. Senior staff


members represented the Council at the semiannual Short-TermEconomic Projections meetings at the OECD in Paris, and at theannual Asia-Pacific Economic Experts Meeting in Sydney. The goalof these meetings was to support the coordination of macro-economic policies to promote economic growth. The Chair and theother Members helped formulate Administration policies thatbrought to completion two major trade agreements, the NorthAmerican Free Trade Agreement and the Uruguay Round of GATT,and provided economic analyses of the implications of those agree-ments for the U.S. economy. The Council also participated in for-mulating other Administration policies in the international arena,including such important initiatives as the National Export Strat-egy, and the ongoing evaluation of the economic relationship be-tween the United States and the People's Republic of China.

Dr. Tyson and Dr. Blinder were deeply involved in the negotia-tions of the United States-Japan Framework for a New EconomicPartnership, with Dr. Blinder making two trips to Japan as partof the negotiations. The Council also engaged in discussions withJapan's Economic Planning Agency on the current account imbal-ances and other macroeconomic issues. The Council was involvedthroughout the year in Administration policies for advancing eco-nomic reform in the former Soviet Union. Dr. Stiglitz traveled toRussia and Ukraine and established an official relationship withthe Russian Government's Working Center for Economic Reform.

The Council provided the President with regular briefings oninternational developments and was particularly active in the prep-arations for the Asia-Pacific Economic Cooperation (APEC) Ministe-rial meeting and the first-ever APEC leaders' meeting hosted bythe President in Seattle.MICROECONOMIC POLICIES

The Council was an active participant in a broad range of Ad-ministration microeconomic initiatives in 1993. Dr. Tyson and theSecretary of Transportation jointly led the Administration's Work-ing Group on Aviation, which developed the Administration's CivilAviation Initiative. At the request of the President, Dr. Tyson alsoserved on the National Commission for a Strong, Competitive Air-line Industry. The Council also assisted in the development of theAdministration's Domestic Natural Gas and Oil Initiative, issuedby the Department of Energy.

Dr. Stiglitz played an important role in the development of twoExecutive Orders—one on regulatory planning and review and an-other on the Nation's infrastructure. Each order directs executivebranch agencies to rely upon cost-benefit analysis when identifyingappropriate regulatory approaches and when determining which in-frastructure projects should be undertaken. Dr. Stiglitz also servesas co-chair of a committee of the Administration's Regulatory


Working Group studying cost-benefit analysis methodology and heparticipated in a number of working groups on financial marketsand economic development. Dr. Tyson and Dr. Stiglitz are alsoworking closely with the Vice President and other Administrationofficials in developing legislative proposals for telecommunicationsregulation. In addition, Dr. Tyson and the other Members are in-volved in analyzing various proposals for bank regulatory agencyconsolidation.

Dr. Tyson was a member of the Health Care Task Force headedby the First Lady and the Council was deeply involved with thehealth care reform effort over the past year, especially in analyzingthe economic effects of reform options. The Council also helped de-velop the tax, empowerment zone, and enterprise communities pro-visions of the 1993 Omnibus Budget Reconciliation Act (OBRA). Dr.Tyson is a member of the President's Community EnterpriseBoard. In addition, the Council participated in the development ofthe Administration's work force security and welfare reform initia-tives and in the design of the Administration's defense reinvest-ment initiative. Dr. Tyson was appointed a member of the Presi-dent's National Science and Technology Council and was appointedthe Administration's representative on the Competitiveness PolicyCouncil. Dr. Tyson and Dr. Stiglitz both served on the Administra-tion's Welfare Reform Task Force.

Dr. Stiglitz was particularly active in the Administration's envi-ronmental policymaking efforts. He chaired the Subcommittee onEconomics Research on Natural Resources and Environment, cre-ated to identify key research areas in economics common to manyenvironmental quality and natural resource management issues.He has also been actively involved in developing the Administra-tion's proposals for Superfund reauthorization, Clean Water Act re-authorization, and the President's Climate Change Action Plan.WEEKLY ECONOMIC BRIEFINGS

Dr. Tyson conducts a weekly economic briefing for the President,the Vice President, and the President's other senior economic andpolicy advisers. Dr. Blinder and Dr. Stiglitz also attend. The Coun-cil, in cooperation with the Office of the Vice President, preparesa written Weekly Economic Briefing of the President, which servesas the basis for the oral briefing. The briefing includes analysis ofcurrent economic developments, more extended treatments of awide range of economic issues and problems, and summaries ofnews on different regions and sectors of the economy.

The Staff of the Council of Economic Advisers

The professional staff of the Council consists of the Chief of Staff,the Senior Statistician, fourteen senior economists, six staff econo-


mists, and two research assistants. The professional staff and theirareas of concentration at the end of 1993 were:

Chief of Staff

Thomas P. O'Donnell

Senior Economists

Jonathan B. Baker Regulation, Industrial Organization, andLaw

David M. Cutler HealthRobert E. Cumby International EconomicsWilliam T. Dickens Labor, Welfare, and EducationConstance R. Dunham Financial Markets and Foreign AssistanceWarren E. Farb Business and Regional AnalysisSally M. Kane Climate Change and Natural ResourcesAlan J. Krupnick Environment and Natural ResourcesErik R. Lichtenberg Agriculture, International Trade, and

Natural ResourcesMark J. Mazur Public FinanceMarcus Noland International EconomicsMatthew D. Shapiro Macroeconomics and the Weekly Economic

Briefing of the PresidentJay S. Stowsky Technology, Defense Conversion, and

Regional Economic DevelopmentRobert F. Wescott Macroeconomics and Forecasting

Senior Statistician

Catherine H. Furlong

Staff Economists

Kevin C. Murdock Technology and FinanceKimberly J. O'Neill Health and Public FinancePeter R. Orszag International EconomicsJeremy B. Rudd Macroeconomics and ForecastingElizabeth A. Schneirov Regulation, Industrial Organization, and

EnvironmentDarryl S. Wills Labor, Welfare, and Agriculture

Research Assistants

D. W. Clark DeesJames C. Hritz

Statistical Office

Mrs. Furlong manages the Statistical Office. The Statistical Of-fice maintains and updates the Council's statistical information,


prepares the Economic Indicators and the statistical appendix tothe Economic Report, and verifies statistics in Presidential andCouncil memoranda, testimony, and speeches.

Susan P. Clements StatisticianLinda A. Reilly Statistical AssistantBrian A. Amorosi Research AssistantMargaret L. Snyder Secretary

The Administrative Office

Elizabeth A. Kaminski Administrative OfficerCatherine Fibich Administrative Assistant

Office of the Chair

Alice H. Williams Executive Assistant to the ChairSandra F. Daigle Executive Assistant to the Chair and

Assistant to the Chief of StaffLisa D. Branch Executive Assistant to Dr. BlinderFrancine P. Obermiller Executive Assistant to Dr. Stiglitz

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 1994 Economic Report.

Sherman Robinson, University of California, Berkeley, servedduring the summer and early fall of 1993 as a senior economistspecializing in the North American Free Trade Agreement. Omri S.Dahan, Michelle R. Dorman, Mark H. Fithian, Ian B. Goldberg,and Jennifer Howard served as student assistants during the year.Suzanne M. Tudor returned to serve as Dr. Blinder's Executive As-sistant during Lisa Branch's leave of absence. Volunteers duringthe year were Diana Billik, William P. Cowin, Matthew T.Henshon, John D. Levin, and Megan R. Sweeney.

DEPARTURES

James D. Foster, who served as Special Assistant to the Chair-man, resigned in January 1993 to accept a position with the TaxFoundation. Shelley A. Slomowitz, Staff Assistant to the Chairman,also resigned in January 1993.

The Council's senior economists, in most cases, are on leave ofabsence from faculty positions at academic institutions or from


other government agencies or research institutions. Their tenurewith the Council is usually limited to 1 or 2 years. Most of the sen-ior economists who resigned during the year returned to their pre-vious affiliations. They are Kwok-Chiu Fung (University of Califor-nia, Santa Cruz), Sherry Glied (Columbia University), Andrew S.Joskow (Department of Justice), Steven B. Kamin (Board of Gov-ernors of the Federal Reserve System), Michael M. Knetter (Dart-mouth College), Howard D. Leathers (University of Maryland),Deborah J. Lucas (Northwestern University), Andrew B. Lyon(University of Maryland), and Raymond L. Squitieri (Departmentof the Treasury). John H. Kitchen went on to a new position at theDepartment of the Treasury. Jonathan B. Wiener accepted a posi-tion on the faculty of the Duke University Law School.

Kevin Berner, staff economist, accepted a position with McKinseyand Company, Inc., Cleveland, Ohio. Junior staff economists (nowdesignated staff economists) are generally graduate students whospend 1 year with the Council and then return to complete theirdissertations. Those who returned to their graduate studies in 1993are: Christopher J. Acito (University of Chicago), Lucy P. Allen(Yale University), Sherif Lotfi (Columbia University), and NatalieJ. Tawil (Massachusetts Institute of Technology). Joshua B. Mi-chael accepted a position with The Eiger Development Corporation,Seattle, Washington. Bret M. Dickey, research assistant, begangraduate studies at Stanford University. Janet J. Twyman, staffsecretary, resigned in 1993.

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. The Coun-cil also has primary responsibility for compiling the monthly Eco-nomic Indicators, which is issued by the Joint Economic Committeeof the Congress and has a distribution of approximately 10,000.


erp1994 appendixes 1

Documents