What is the Council of Economic Advisers?
The Council of Economic Advisers (CEA) is a group of economic experts, appointed by the US President and the Senate, which advises the President on both domestic and international economic policy. It provides much of the objective empirical research for the head of state and his or her team, and also prepares the President’s annual Economic Report.
The CEA’s Chairman is nominated by the President and then approved by the Senate. The Council’s members are appointed by the President. The Council consists of a Chairman and two Members, who are supported by about twenty academic economists, and three permanent economic statisticians.
The current Chairman is Jason Furman (July 2015), and the Council’s members are Maurice Obstfeld, a professor of economics at the University of California, Berkeley, and Betsey Stevenson, an economist and Associate Professor of Public Policy at the University of Michigan Gerald R. Ford School of Public Policy.
The CEA advises the White House on domestic and international economic policy.
Janet Yellen, the current Chair of the Board of Governors of the Federal Reserve System, was Chairman of President Bill Clinton’s Council of Economic Advisers from 1997 to 1999.
The CEA was established by Congress in the Employment Act of 1946. According to the White House, it has the following duties and functions:
1. To advise and assist the President in preparation of the Economic Report.
2. To collect timely and authoritative data concerning economic trends and economic development, both current and for the future, to analyze and interpret such data in the light of the policy declared in section 2 “for the purpose of determining whether such developments and trends are interfering, or are likely to interfere, with the achievement of such policy, and to compile and submit to the President studies relating to such developments and trends.”
3. To evaluate the Federal Government’s programs and activities in the light of the policy declared in section 2. To determine whether those programs and activities are meeting their objectives, and to which extent they might not be. Also, to make recommendations on them to the President.
The Employment Act of 1946, which was signed by President Harry Truman, created the Council of Economic Advisers. (Image: federalreservehistory.org)
4. To develop and recommend to the president economic policies to avoid economic fluctuations or diminish their effects, promote free competitive enterprise, and to maintain production, purchasing power and employment.
5. “To make and furnish such studies, reports thereon, and recommendations with respect to matters of Federal economic policy and legislation as the President may request.”
Video – Jason Furman, Chairman, Council of Economic Advisers
In this video, Prof. Furman talks about economic volatility, how it has changed over time, what lessons we can draw from how it changed over time, and to think more broadly about the question of macroeconomic stabilization.