Twenty-six Economists, Promoting World Recovery: A Statement on Global Economic Strategy, Institute for International Economics, Washington, D.C., December, 1982.

Preface

The world economy is obviously in severe trouble. Yet no consensus has emerged on the causes of the problem or on changes in policies which might ameliorate the situation. Moreover, virtually all suggestions to date have been framed in a purely national context whereas there are international dimensions to the issue which both increase its severity and render its correction more difficult.

The Institute for International Economics thus decided to hold an international conference of outstanding economists to see whether it 'would be possible to reach both a common diagnosis of the problem and a consensus on what should be done about it. The response to that suggestion was encouraging, and a meeting was held on November 22-23, 1982, in Washington. Twenty-six economists from fourteen coun¬tries, representing a wide variety of points of view, signed the statement that emerged from this session. The signatories of the statement hope that it will help point the way toward policy changes in all of the major countries that would, collectively, be capable of improving the world economic outlook and, therefore, the prospects for individual nations and peoples.

Following the statement is a background paper prepared for the meeting by John Williamson, a Senior Fellow at the Institute for Inter-national Economics.

The Institute for International Economics is a private nonprofit re-search institution for the study and discussion of international economic policy. Its purpose is to analyze important issues in that area and to develop and communicate practical new approaches for dealing with them. Unlike most of its publications, this one does not aim to develop original proposals for dealing with problems over the medium term but rather seeks a consensus view on a critical current issue.

The Institute was created in November 1981 through a generous commitment of funds from the German Marshall Fund of the United States. Financial support has also been received from other private foun¬dations and corporations. The Institute is completely nonpartisan.

The Board of Directors bears overall responsibility for the Institute and gives general guidance and approval to its research program—in¬cluding identification of topics that are likely to become important to international economic policymakers over the medium run (generally, one to three years) and which should be addressed by the Institute. The Director of the Institute, working closely with the staff and outside Advisory Committee, is responsible for the development of particular projects.

The Institute hopes that its studies and other activities will contribute to building a stronger foundation for international economic policy around the world. Comments as to how it can best do so are invited from readers of these publications.

C. Fred Bergsten, Director

Promoting World Recovery

1 SUMMARY AND PRINCIPAL RECOMMENDATIONS

The world is in an economic crisis. There is scant prospect of any prompt spontaneous recover from the present deep recession. Until recovery occurs there is a continuing anger of an outbreak of trade warfare and competitive devaluation, or of a financial collapse, that could destroy interdepenent world economic system that emerged in the postwar years.

The decline in inflation does not itself promise to produce a recov¬ery, but it does provide scope for policy to be shifted in an expansionary direction so as to promote recovery. Such a policy adjustment should be undertaken promptly. It should be internationally coordinated, for there is little prospect that an adequate global stimulus could result from a series of isolated national actions, and considerable risk that isolated "locomotives" might find themselves subject to excessive depreciation that rekindled inflation. In particular, neither can the world simply wait for the United States, nor can the United States be certain of achieving adequate recovery on its own.

It is of paramount importance on this occasion, unlike in previous expansionary periods, that policy consolidate the success that has been achieved in reducing inflation. This implies a need to combine a series of national supply-side policies tuned to the individual needs of different countries with a concerted global macroeconomic stimulus, as well as to take continuing care to avoid repeating the error of excessive demand stimulation.

Five of the seven largest economies have sufficiently strong pay¬ments positions and sufficient control of inflation to justify their joining in a concerted move to expand demand:

• The United States should act mainly by a further relaxation of mon¬etary policy, aimed at actively reducing short-term interest rates by at least a further two percentage points. Firm action should be taken now to reduce the budget deficit in the medium term, which would provide scope for a further modest easing of the fiscal stance in the short term.

• Japan should adopt a more expansionary fiscal policy, with limited monetary accommodation so as to permit the yen appreciation needed for a better balance of the world economy.

• Germany should also adopt a moderately more expansionary fiscal policy, while further reducing its interest rates as well.

• In France, inflation and payments pressures are still too strong to justify new expansionary moves.

• The United Kingdom is in a position to adopt a more expansionary fiscal-policy,-and. also requires a more relaxed monetary stance.

• Italy is not in a situation to take reflationary measures, although world expansion should enable it to limit new contractionary moves that may otherwise prove necessary.

• Canada would not be in a position to take expansionary actions uni¬laterally, but should be able to join in a concerted move, primarily by a more expansionary monetary policy.

The policy mix advocated here would be consistent with correction of present misalignments in exchange rates, involving overvaluation of the US dollar and pound sterling and undervaluation of the Japanese yen and perhaps the Deutsche mark. Countries should aim to limit any new overshooting that may develop as the present misalignments are corrected. A better alignment of exchange rates and renewed growth would help ease protectionist pressures, which should also be countered by firm adherence to the recent pledge to avoid new trade restrictions and renewed efforts to negotiate further trade liberalization. A reason-able level of commercial bank lending to developing countries needs to be sustained, and a part of the remaining gap should be filled by increased lending by the International Monetary Fund and World Bank.

2 THE WORLD ECONOMIC CRISIS

The current recession is the longest, and on most measures already the deepest, for half a century. Unemployment stands at the postwar record of 32 million in the member countries of the Organization for Economic Cooperation and Development (OECD), and is still rising virtually every-where. Capacity utilization and profits are dangerously low. World trade is declining substantially, for the first time in the postwar period. Commodity prices are at their lowest real levels for thirty years. Economic growth has gone into reverse in Latin America and sub-Saharan Africa and been halved even in the most dynamic developing countries in East Asia. Corporate bankruptcies are high and rising, debt reschedulings and arrearages are widespread, and the threat of a financial collapse is uncomfortably high.

The clear fall in inflation and the decline in interest rates since last summer are welcome developments, but they are insufficient to hold out hope of restoring even a modicum of global prosperity in the mid-1980s. Real rates of interest remain extremely high. High and rising unemployment dampens the prospect for an upturn in consumer spending. Productive investment is falling. As of now there is little evidence of recovery, and most forecasts predict at best weak expansion in 1983 and beyond. The minimum growth rate that would be needed to prevent further rises in unemployment in the OECD area, some 2–3 percent per annum, is at the top of the range of current forecasts for actual growth.

On present trends, therefore, there is virtually no prospect of reversing the rise in unemployment in the near future. While slow or even zero growth was acceptable to many governments in recent years to bring down inflation, the minimal growth now forecast serves no similar useful purpose. Rather, the perpetuation of stagnation brings the presumption of further declines in the volume of trade and raises the specter of a possible breakdown in the world economic order. This could result either from the outbreak of trade wars and competitive devaluations, as countries seek to export their unemployment, or from a collapse of the financial system as a result of the payments difficulties of the newly industrializing countries or the insolvency of major firms.

The world economy is in a crisis—using that term to connote a situation where there is a threat of breakdown, although no breakdown has yet occurred. Removing that threat, and thus resolving the crisis, requires a recovery in economic activity. During the recovery phase growth will need to be substantially higher than the underlying medium-run growth rate of some 3 percent per annum. Both achieving that higher growth rate and ensuring that the resulting recovery is sustainable require prompt action to adopt an appropriate package of policies.

3 ORIGINS OF THE CRISIS

The restrictive monetary and fiscal policies that have been pursued by most countries since the second oil shock were motivated by a desire to stem the wave of global inflation that took hold a decade ago. That inflation was initiated in the late 1960s and early 1970s by the excess demand resulting from attempts to avoid hard choices between priorities, the emergence of inconsistent real income aspirations, and irresponsibly expansionary monetary policies. It was sustained by over-optimistic beliefs regarding the level of activity that could be safely sustained, accommodating monetary policies, the two oil shocks and subsequent failure to accept the cut in real incomes implied by the massive rise in oil prices—and, more generally, loss of confidence in governments' ability to resolve those problems.

Restrictive policies have had significant success in checking inflation and reversing inflationary expectations. But at the same time there is increasing cause for concern that confidence in future growth has been severely shaken. There is now a real danger that the inflationary psychology of the 1970s could give way to a stagnation psychology that could rule out any significant recovery in the 1980s.

Governments are reacting too slowly to this danger. They are basing policy on the assumption that private sector behavior will not lose resilience despite recent experience. They have been underestimating the international linkages which, through declining trade and high interest rates, have caused restrictive policies pursued simultaneously in many countries to have a greater deflationary impact than expected or intended. And each country, facing a hostile world environment, has been forced on to the defensive, and feels itself to be in a position in which any significant change in present policies is fraught with danger. The result is an increasing paralysis in national and international policymaking.

4 THE NEED FOR COORDINATED AND BALANCED EXPANSION

In this situation, there is a clear need for an internationally coordinated shift in the near-term stance of fiscal and monetary policies toward expansion. Such a move by the industrial countries at the present time would contribute to resolving a series of problems: it would cut unemployment, reduce protectionist threats, relieve pressure on the financial system, and help restore growth in the developing countries. There is a danger that the ease of expanding demand can seduce governments into neglecting the complementary policies that are necessary for expansion to be sustainable. Demand expansion is indeed essential at this time when unemployment is much above the rate that suffices to keep inflation in check, but it is equally essential to be cognizant of the limitations of demand-side policies and the need for complementary measures.

It would be mistaken to hope that expansionary demand policies alone could return the industrial countries to the high growth rates or low unemployment levels of the 1960s. Present high rates of unemployment reflect more than the state of the business cycle: real labor costs are too high in many countries, and structural change may be having an impact that is still poorly understood. The growth rate and the unemployment level that are feasible without provoking inflation depend on supply conditions and the state of the labor market; all that demand policies should be asked to do is to avoid more slack than is necessary, given labor market institutions, to keep inflation in check.

The question can be raised as to whether long-term productivity gains should not in the future be realized more in the form of increased leisure or environmental restoration as opposed to ever higher real wages and material output. It is indeed desirable that artificial impediments to individuals choosing the option of increased leisure with unchanged hourly wage rates be removed. But, whatever answer is given to that question, that does not detract from the immediate need to move to more expansionary demand management policies.

Some of the stronger countries could and should take action to expand demand at the present time even without a concerted international move. But in present circumstances—which combine a deep recession, a widespread fear of rekindling inflation through currency depreciation, and economies so open that a large part of any increase in demand spills over abroad—it is most unlikely that a series of unilateral moves would add up to an adequate global expansion, if indeed they would take place at all.

5 THE POLICY INSTRUMENTS

An expansion in demand requires a more stimulative overall stance of fiscal and monetary policy. Both the extent of stimulus, and the mix of monetary to fiscal stimulus, should vary between countries, but need to be internationally coordinated with a view to securing a sustainable expansion. Countries with an exceptionally weak balance of payments position or continuing high inflation should maintain restrained demand management policies, although world expansion may enable them to limit contractionary moves that would otherwise be necessary.

Monetary expansion should be emphasized by those countries that are in a position to expand by virtue of low rates of inflation and a satisfactory balance of payments, but which have large fiscal deficits, especially if their currencies are overvalued. In deciding how far to push monetary expansion, countries should pay more attention to real interest rates and exchange rates, and less to the growth of the monetary aggregates, than has been the practice in recent years. The monetary expansion required to reduce real interest rates to the low levels that are appropriate to promote recovery from the present deep recession may prove to be quite substantial, if, as one would expect, the welcome reversal in inflationary expectations has served to increase the demand for money. That increase in demand needs to be satisfied by a once-for-all upward step in the path of the money supply if a healthy recovery is to be possible. But the need for an immediate reliquification of the economy should not lead to permanently higher rates of monetary growth, since that would eventually be bound to generate renewed inflationary pressure.

Fiscal expansion should be emphasized by countries that are in a position to expand and which are not suffering from a large budget deficit, especially if their currencies are undervalued. In judging the size of a fiscal deficit, it is appropriate to examine not only the size of the deficit relative to GNP but also (a) the level of private savings; (b) the extent to which the measured deficit includes interest payments on the national debt that simply compensate for inflationary erosion of the real value of the outstanding debt; (c) the amount of public investment that is being financed through the budget; and (d) the extent to which the budget deficit reflects a weak cyclical position rather than underlying structural factors. In recent years much harm has been done by governments' tightening fiscal policy in an attempt to eliminate budget deficits created by recession—a process that does more to intensify recession than it does to reduce the budget deficit.

Many governments have been hesitating to adopt expansionary fiscal policies out of a fear that this would further swell the size of a public sector that they already regarded as too large. However, that consideration need not prevent a government from boosting demand by cutting taxes. Matters are more difficult where there is legitimate concern not only with the size of the public sector but also with the size of the fiscal deficit, but even then there should be scope for action. In general measures taken now to reduce expenditures or increase taxes for structural reasons should be stretched out, or "back-end loaded," while action to increase expenditures or reduce taxes consistent with medium-term objectives should be brought forward, or "front-end loaded." Where effective action is being taken to reduce structural deficits, there may be a case for temporary tax cuts to stimulate private spending. Where it is decided to increase spending for cyclical reasons, it is in general desirable that this take the form of quick-disbursing and once-over public infra-structure investment rather than an expansion of transfer payments which could not easily be cut back in the future. Where it is decided to cut taxes despite a continuing problem of inflation, it will often be useful to reduce taxes that add to production costs, and so alleviate cost push.

One objection to fiscal stimulus is that an increased budget deficit may "crowd out" private investment. There are certainly circumstances in which this can occur, as when the economy is already fully employed—a case that is conspicuously irrelevant at present. (More subtly, an in-creased budget deficit will partially crowd out private spending whenever monetary policy is nonaccommodative, via the induced increase in interest rates. Such crowding out can, however, be avoided by an accommodative monetary policy.) There remains some danger that long-term interest rates might rise rather than fall if asset holders believe that bigger current budget deficits will be perpetuated and accommodated even after activity has revived. That danger emphasizes yet again the importance of ensuring that expansionary policies are not pushed to the point of reigniting inflation, but there is little danger of that in the immediate future.

The measures to stimulate demand advocated above need, in most countries, to be accompanied by efforts to increase the flexibility and supply response of the economy. While the particular problems of major concern vary from one country to another, three fairly general issues are worthy of note:

(1) In many countries, especially in Europe, the rapid rise in public expenditure, and particularly social transfers, has run ahead of the capacity to raise taxes. Shifting of taxes through price or wage increases has in some cases generated tax-push inflation and in other cases put pressure on rates of return in the private sector. In some countries the real incomes of those at work have fallen because of slow growth and deteriorating terms of trade, yet social benefits in real terms have continued to rise. High marginal tax rates and other features of the tax/benefit system have in places adversely affected incentives to work, save, and invest. While the role of the public sector is ultimately a matter of social choice, there is a widespread need to bring the growth of social expenditure down in line with the reduced growth potential of the industrial economies. More emphasis should, in some cases, be given to public infrastructure investment in such fields as transport and communications.

(2) In some countries real labor costs have risen—and the rate of return on productive investment has fallen—to the point at which in-creased demand is unlikely to call forth sufficient investment, and where such investment as occurs is likely to be too much biased against the use of labor. Where this has been due to a rapid rise in social security contributions and other nonwage labor costs, the solution lies in slowing the rise in social expenditure and restructuring its financing. Where the problem is that real wages are too high, efforts should be made to bring about the necessary correction, as by seeking a better understanding of the nature of the problem by the social partners.

(3) More action is also needed to improve response to changing relative prices and comparative advantage. Trade policies, regulatory policies, and national industrial and manpower policies should not prop up or protect declining activities but should rather ensure that prices and wages give a proper reflection of opportunity costs. In many countries there is a need for expanded retraining programs, and in some countries there may be a case for expanded adjustment assistance.

Given the depth of the recession, measures to stimulate demand should not threaten to increase the underlying rate of wage inflation at this time. There may well be some increase in measured inflation because of the need to restore profit margins, raise commodity prices, and in some countries to correct the exchange rate. In order to prevent these necessary changes in relative prices from setting off a new price-wage spiral, further efforts may be both possible and desirable to reduce the inflationary potential of existing arrangements for wage bargaining and price setting. Particular attention should be paid to modifying indexation or other arrangements that prevent real wages from adjusting to changes in the terms of trade or other exogenous shocks.

Preventing expansionary policies from reviving inflation in the longer term requires, as well as improvements in the functioning of labor markets, the discipline to take restraining action promptly when symptoms of inflationary stress first appear.

6 GUIDELINES FOR INDIVIDUAL COUNTRIES

The United States is in a position to expand, but it faces a constraint on its freedom of action from the size of the fiscal deficits in prospect in future years. Fiscal policy is already quite expansionary: while there is scope for additional modest stimulus in the short run, it is important that this be done in a way that is consistent with fiscal tightening in the medium term. The major short-term expansionary thrust should thus come from monetary policy. There is a short-run need for further significant cuts in interest rates, of at least two percentage points, for both domestic and international reasons—that is, so as to promote recovery in the United States and to allow cuts in interest rates elsewhere in parallel with a correction of the overvaluation of the dollar. Such a correction is important in order to relieve protectionist pressures and minimize the risk of future international monetary instability, and also in terms of the US domestic economy.

Japan need not be constrained by inflation or the balance of payments from adopting more expansionary policies. Fiscal policy has moved in a contractionary direction throughout the recession. Although the budget deficit (5 percent of GNP, 30 percent of government expenditure) and the public debt (40 percent of GNP) are both substantial, these figures have to be viewed in the context of the continuing very high household savings rate (about 20 percent of disposable income) and the slowdown in investment. Instead of cutting back government expenditure, there is a need for additional fiscal stimulus at this time, with the subsequent rise in tax revenue being relied on to limit the increase in the budget deficit. A fall in US interest rates would permit an element of monetary accommodation of the fiscal expansion, thus stimulating investment, which is particularly needed in the smaller enterprises. Monetary expansion should nevertheless be limited so as to permit an appreciation of the yen, which is a precondition for dismantling the restraints on Japanese exports that have mushroomed during the period of yen undervaluation. A more realistic value of the yen might also be encouraged by liberalization of the internal Japanese capital market to match the liberalization of capital outflows, and by foreign borrowing by the Japanese government to finance a part of the budget deficit. It should be noted that for evaluating the external performance of an economy overall current account balance, including services, trade, and multilateral settlements, should be looked at instead of the bilateral commodity trade balance. Looked at from this view point, Japan has not been accumulating undue surpluses of foreign exchange in recent years.

Germany is experiencing a sharp drop in domestic demand after an extended period of stagnation, despite the fact that most of the conditions necessary to resume growth have been achieved. It would clearly be inappropriate to tighten fiscal policy under these conditions. While there is still an uncomfortably high budget deficit, the needed structural re-forms should be combined with an immediate fiscal stimulus. This stimulus should be designed to have a major impact on private investment, combined with a structural shift in government expenditure from consumption purposes to public investment. There is also scope for further reductions in German interest rates.

In France inflation is still high and profitability too low. This is a case where an incomes policy, backed by cautious monetary and fiscal policies, can have an especially useful role to play. Lower inflation in France, together with the policies for stronger growth in the world economy advocated here, should ease pressures on the franc and reduce the temptation to resort further to protectionist measures.

The United Kingdom has had considerable success in reducing inflation and still enjoys a strong (though deteriorating) payments position. For most of the recession fiscal policy was contractionary, as a result of which the budget is now in surplus after deducting interest payments that simply compensate for inflation (even without correcting for the recession). The modest recent moves to relax fiscal policy are therefore in the right direction and should be reinforced in a context of expansionary actions elsewhere. Despite the recent sterling depreciation, the lack of competitiveness of British industry remains a severe problem, so a monetary stimulus, would be appropriate for both its internal and external effects, provided that additional depreciation secures a lasting reduction in real labor costs. To help ensure this outcome, the fiscal stimulus might usefully be injected by measures that would cut labor costs, for example, by reducing taxes on employment. The ability of such an approach to reduce unemployment will depend critically on wage restraint.

Italy would benefit from a recovery of the world economy, which should enable it to limit the effect on output of contractionary actions that may prove inevitable. Reflationary action is at present inadvisable in view of the persistence of very high inflation, of the current account deficit, and of the severe financial problem posed by a large public deficit. Resumption of faster growth will not be possible until action has been taken to remove the inertial factors of domestic inflation, to bring the expansion of public expenditure under control, and to improve the supply conditions of some sectors.

The inflation rate in Canada has responded more slowly to recession than it did in the United States. This means that, despite a current account surplus and high unemployment, it would be very difficult to switch policy unilaterally in an expansionary direction, since in such an open economy this would invite a renewed depreciation with attendant inflationary pressures. But there is scope for Canada to join in a concerted move to expand demand. Monetary growth (currently below target) could be increased somewhat and interest rates reduced, especially in step with further reductions in US interest rates. There are no structural or other reasons to prevent Canada from joining in a general expansion, with the main impetus provided by monetary policy.

The preceding discussion of the seven largest economies illustrates the principles that we would also wish to see applied in the smaller economies of the world, both developed and developing. Countries that are strong enough to join in the general move to expand demand should do so, using whatever combination of monetary and fiscal measures is suited to their individual situations. Countries still suffering from unacceptably high inflation or a particularly weak payments situation should continue to follow cautious demand policies, though it is to be hoped that the resumption of world growth will enable them to limit contractionary measures that might otherwise be called for. Countries in both categories should pay attention to whatever supply-side factors or market imperfections are particularly constraining their own performance.

The more countries that resolved to participate in a global switch to expand demand according to these principles, the better the prospects would be for a prompt, noninflationary, and sustainable recovery.

7 GUIDELINES FOR THE INTERNATIONAL SYSTEM

The mix of policies advocated above for individual countries would help to correct some of the distortions in the present pattern of exchange rates among the major currencies. The authorities of the five Special Drawing Right (SDR) currencies, who have agreed to cooperate with the International Monetary Fund to make Fund surveillance more effective, should initially concentrate their attention on reinforcing the market forces that are making for an appreciation of the yen vis-a-vis the dollar. The recent strengthening of the Deutsche mark and depreciation of the pound have also helped to ease earlier misalignments. It is important that the unwinding of existing misalignments not be followed by a new overshooting of exchange rates. Past experience suggests that will require the major countries to show a new readiness to recognize that exchange rates are a legitimate topic of international concern and a legitimate influence on national monetary policies.

A better alignment of the major exchange rates would be helpful in limiting protectionist pressures and preventing further erosion of the liberal trading system. But it will not in itself be sufficient to restore the momentum toward open trade that was so important in generating and generalizing postwar prosperity, and which must resume if the present trend toward increasing resort to trade controls is to be halted. It is vital that the pledge to resist the imposition of new trade restrictions agreed at the ministerial meeting of the General Agreement on Tariffs and Trade be observed faithfully by all parties. The limited work program laid out at that meeting, covering further studies on safeguards and agriculture, should be pursued energetically, and should be extended, as soon as possible, to the launching of new negotiations to continue the positive process of reducing trade barriers in all countries.

While the developing countries cannot escape the need for adjustment to reduce their payments deficits and slow down the rate of debt accumulation, there is a danger that too drastic retrenchment of lending will cause a lasting setback to development. The commercial banks should be prepared to increase their net lending to developing countries by some 5—10 percent overall over the next twelve months, and by more for countries with convincing adjustment programs. All banks that have been active in international lending in the past should continue to participate.

But this would still represent a halving in the rate of net lending by the commercial banks, and thus still leave a large ex ante gap in the financing of developing countries' current account deficits. Such a situation calls for the International Monetary Fund to play a stabilizing role in the world economy, by lending on a substantial scale to countries that adopt policies giving reasonable assurance of balance of payments adjustment. The Fund should not force borrowing countries into cutting back output unreasonably below capacity for the sake of achieving full adjustment before the world economy recovers from recession. There should be prompt agreement on expanded financing for the Fund, to give it the resources to accept these responsibilities.

Furthermore, the cutback in new commercial bank lending has destroyed the case against new allocations of SDRs, which was based on the widespread availability of liquidity through borrowing. The recent fall in official reserves, and widespread pressures on liquidity, suggest that a resumption of SDR allocations would be timely.

There should also be a sharp increase in the structural adjustment lending of the World Bank, to supplement Fund credits and to assure a prominent place for supply-side considerations in the adjustment pro-grams of borrowing countries. Additional disbursements by the Fund and Bank of some $10 billion per annum for the next year or two, added to the relief brought by lower interest payments on commercial loans, would go a considerable way toward temporarily filling the gap left by the shortfall in commercial bank lending.

New thought will be needed concerning the possibility of a major restructuring of developing-country debt and the modalities of the transfer of real resources to developing countries in the medium term. Whether this takes the form of an expansion in official aid, a revival of commercial bank lending, or the emergence of new channels for private sector lending, there will be a need at least to monitor and perhaps to guide the buildup of debt so as to avoid a new crisis. Debtor countries will have to accept constraints designed to ensure proper economic management, in return for some assurance of continued borrowing possibilities.

SIGNATORIES

C. FRED BERGSTEN

Director, Institute for International Economics; former Assistant Sec¬retary for International Affairs, US Treasury

RODRIGO BOTERO

Executive Director, Foundation for Higher Education and Development, Bogota; former Minister of Finance, Colombia

WILLEM HENDRIK BUITER

Professor of Economics, London School of Economics; Research Asso¬ciate, National Bureau of Economic Research

WILLIAM R. CLINE

Senior Fellow, Institute for International Economics; former Deputy Director for Development and Trade Research, US Treasury RICHARD N. COOPER

Maurits C. Boas Professor of International Economics, Harvard Uni¬versity; former US Under Secretary of State for Economics Affairs RIMMER DE VRIES

Senior Vice President and Chief International Economist, Morgan Guar¬anty Trust; Member, Time Board of Economists

RUDIGER DORNBUSCH

Professor of Economics, Massachusetts Institute of Technology; Re-search Associate, National Bureau of Economic Research

JOHN HELLIWELL

Professor of Economics, University of British Columbia; former Man-aging Editor, Canadian Journal of Economics

ARNE JON ISACHSEN

Professor, Institute of Economics, University of Oslo; former Deputy Director, Department of Finance, Norway

HISAO KANAMORI

President, Japan Economic Research Centre, Tokyo; former Deputy Di-rector, Economic Research Institute of the Economic Planning Agency, Japan

PETER B. KENEN

Walker Professor of Economics and International Finance and Director of the International Finance Section, Princeton University

KIM KIHWAN

President, Korea Development Institute; Member, Monetary Board, Re-public of Korea

LAWRENCE R. KLEIN

Professor, University of Pennsylvania; Nobel Laureate, 1981 LAWRENCE B. KRAUSE

Senior Fellow, The Brookings Institution; former senior staff member, US Council of Economic Advisers

ASSAR LINDBECK

Professor of International Economics and Director of the Institute for International Economic Studies, University of Stockholm; Chairman, Nobel Prize Committee for Economics

RICHARD G. LIPSEY, F.R.S.C.

Sir Edward Peacock Professor of Economics, Queens University; past President, Canadian Economic Association

WILHELM NOLLING

President, Landeszentralbank, Hamburg, Federal Republic of Germany; Member, Board of Governors, Deutsche Bundesbank

SABURO OKITA

President, International University and Institute for Domestic and In¬ternational Policy Studies, Tokyo; former Minister of Foreign Affairs, Japan

I.G. PATEL

Director, Indian Institute of Management; former Governor, Reserve Bank of India

GEORGE L. PERRY

Senior Fellow, The Brookings Institution; former senior staff member, US Council of Economic Advisers

KARL SCHILLER

Former Minister of Economics and Finance, Federal Republic of Ger¬many

MARIO HENRIQUE SIMONSEN

Director, Graduate School of Economics, Getulio Vargas Foundation, Rio de Janeiro; former Minister of Finance and former Minister of Plan¬ning, Brazil

LUIGI SPAVENTA

Professor of Economics, University of Rome; Member, Italian Parliament LIONEL STOLERU

Professor of Economics, Ecole Polytechnique, Paris; former Vice Min¬ister of Labor, France

LESTER C. THUROW

Professor of Economics, Massachusetts Institute of Technology; Con¬tributing Editor, Newsweek

JOHN WILLIAMSON

Senior Fellow, Institute for International Economics; former Advisor, International Monetary Fund