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2. A permanent Interagency Committee on Long

Term Growth Models is appropriate, with regularly scheduled meetings to ensure that such exchange occur and that technical problems can be fully explored. The Ad Hoc Committee displayed an interest in improved coordination through a standing and active committee 10 enhance the collaboration which currently occurs on an informal basis; however, no action has been

taken to date to establish such a committee. 3. The diverse objectives of agencies require

considerable freedom in specifying model objectives and selecting methodological approaches. Thus, the Committee felt that a single ceniral model would not be an effective way to meet the Federal Government's needs for longterm analysis. These points are elaborated in the next sections.

holds discussions with the Commerce Department's Regional Economics Division, the Energy Information Administration, and the Environmental Protection Agency in order to help provide consistency in the macroeconomic environment assumed for the different studies and to avoid duplication of effort.

The OBERS project is another program which was developed as a cooperative effort. The term OBERS, in fact, is an acronym derived from BEA's former title, the Office of Business Economics (OBE), and from ERS which is now incorporated in the Economics, Statistics, and Cooperatives Service. OBERS also directly uses Census population projections by age and sex group and the Bureau of Labor Statistics' projections of the labor force by age and sex group as the national controls for projections of related data.

Informal Coordination

The Interior Department programs involve varying degrees of coordination. The Minerals Availability System has been coordinated with the Geological Survey in collecting supply data and uses demand projections from outside the system. The study U.S. Energy Through the Year 2000 draws extensively on all information available from other agencies, including the FEA, FPC, and FTC. The recreation site forecasting project uses Census and OBERS projections. The Continental Shelf program uses some energy forecasts from the Bureau of Mines and the PIES study and some analysis done by SEAS.

So throughout the area of long-term forecasting, extensive and rather successful coordination is found-in both formal and informal terms.

The selected projects described earlier illustrate the diversity of existing Federal Government efforts to develop long-range models and related analysis in selected key policy areas. These models have not all been developed independently. When long-range modeling was first initiated through the Interagency Growth Project, it was clearly a coordinated approach involving continuing participation of key agencies, especially BEA and BLS. Over time, as the program matured and the critical methodological issues were resolved, the efforts became more specialized, with primary attention being given to refinements of procedures and the production of updated versions of the results. Thus the need for a final coordinating effort diminished, and the Committee became inactive.

The BEA model projections also incorporate projections of other Government agencies for a number of the necessary exogenous inputs. For example, the Bureau of the Census population projections and the labor force projections of the Bureau of Labor Statistics are significant inputs to the demographic assumptions in the BEA model. Also, BEA consults the Social Security Administration, the Civil Service Commission, the Department of Defense, and the Bureau of the Census for projections of Social Security. developments and retirements of Federal, State, and local government employees.

Interagency Committee on Long-Term Growth Models

Although a great deal of informal interagency communication now takes place, the discussions of the Ad Hoc Committee demonstrated that a formal committee would be extremely helpful. Its most important function would be to facilitate the exchange of information between model builders at several levels. Meetings could be organized around particular technical issues of interest to all long-term economic growth modelers. Such topics include what population projections are available and how they were arrived at, what range of productivity assumptions are reasonable, and other discussions of data or assumptions that are essential to nearly all models.

One aspect of these discussions would be that modelers who use, for example, energy forecasts from the Department of Energy (DOE), would be able to discuss with other modelers the assumptions behind

Coordination between the Interagency Growth Project and other agencies generally takes the form of informal technical exchanges. In many cases, these exchanges provide valuable insights which enhance the quality of the projections. For example, BLS

those forecasts and their limitations. These model towards coordination of these smaller-scale forecasts. builders would then be better able to judge how much It would also lead to much greater comparability they should rely on the DOE energy forecasts in their among the forecast results. The second major own models or what changes they should make to be advantage in theory would be efficiency. By consistent with particular assumptions implicit in concentrating the Government's macroeconomic their own efforts. Further, DOE uses inputs from modeling ability in one place, it seems reasonable to other models as well. Thus, the process would be one assume that a better model could be developed, at of mutual information exchange. These discussions

less total cost than is required to develop separate should occur at regularly scheduled intervals and are macromodels in different agencies. expected to be of interest and value primarily to the

Unfortunately, these advantages are not likely to technicians who are actually building and running the

be realized. Against the prospect of a single set of models.

predictions for all models to use, is set the diversity of An active and continuing Interagency Committee needs evidenced by model users. The BLS model should also have a larger role to play in relation to requires labor force projections in great industry major users of the models. This would involve co detail, while the Department of Energy models ordinating and emphasizing the policy purposes and require a fine breakdown of energy demand by end user needs for the models. There should be periodic use, for example. To include this degree of detail for meetings between the policymaking users within the all sectors would overburden a model to the point of Departments which build the models and outside infeasibility. users such as CEA, Treasury, and the Federal

The potential gain in efficiency of building only Reserve Board to explore specific uses of existing

one model is likely to be more than off set by the models. This would result in an exchange of ideas and

technical impracticality of trying to generate data in greater understanding of the powers and limitations

great detail from one model in one agency to be used of the available models. These meetings should also

as input into a specific sector model in another focus on unmet needs that users have-a discussion

agency. The details of data transfer are difficult which could be very helpful to the model builders in

enough when the transfer is between two programs in their efforts to improve the utility of their models.

one computer. The agencies of the Federal There are other tasks this Committee might wish to Government not only have different computers, but undertake. One is the publication of a User's Guide different models and types of computers, so the to Long-Term Growth Models in the Federal problems involved in data transfer alone would make Government. Another task might be to survey public a single central model extremely expensive. and private model users to discover unmet needs. A Furthermore, different sectoring may be appropriate very important function would be defining data gaps for models used for varying purposes. Finally,

types of data which many models require, yet although fiscal assumptions may be standardized for which are not currently available.

some purposes, in other cases the end product desired

is fiscal impact, so that a model whose purpose was to As a result of the discussion of these ideas by the

investigate the impact of one set of fiscal policies Ad Hoc Committee, the need for and a purpose of a

could not use forecasts based on assuming a different formal interagency committee became clear. Since

set. The conflict of inputs in one case being outputs in the needs for improved data and data standards are a

another case is found throughout the variables used direct product of such a committee, the OFSPS plans,

in the various models. in FY 1979, to establish an Interagency Committee on Long-Term Growth Models as a continuing

While the importance of improved coordination in activity with regularly scheduled meetings. These

modeling efforts is evident, it was a clear consensus of meetings will be designed to ensure a more intensive

the Ad Hoc Interagency Committee that it would be effort to share data needs and results and to serve the

inappropriate and, in fact, counterproductive to needs of model users.

attempt to achieve a single general-purpose model

and single standard set of assumptions to meet the Problems With A Single Central Model

needs of all the different agencies. In fact, most

participants believed that pluralistic analysis and There are two major points in favor of building conflicting assumptions strengthen the opportunities only one macroeconomic model within the Federal for effective policy debate, and that a restriction of Government. The first is that it could serve as an assumptions or methodology raises a high risk of "official" forecast. All the single-sector or smaller sterilizing that debate. While rejecting the practicality scale models could use the same national-level of a single model, the Ad Hoc Committee discussions estimates as input, and this would be a major step stressed the importance and value of a formal

interagency committee in performing a centralizing role. For example, consensus values of GNP growth or labor force size could be reached which most modelers would feel comfortable in using, at least as base line figures.

3. There is a strong feeling that the establishment

of a central economic forecasting model would be counterproductive and too binding in developing helpful decisionmaking tools. One reason for this is that the purposes of each model are so diverse that no one model could serve them all. Another reason is that the technical difficulties of interface between separate models are such that a central model would not be efficient.

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It should be noted, however, that if the proposed Interagency Committee were to develop consensus values and assumptions that would be guides for individual models, these would change over time as knowledge of events changed. This process of adjustment is common to all forecasting efforts, even in fields as well understood as demography. Between 1967 and 1975, changes in fertility rate trends caused the projected 1990 population to be lowered by 20% in the category of people born after 1965. Similarly, the abundant energy assumptions concerning economic growth made a decade ago have been largely replaced by the energy-constrained assumptions that characterize current estimates. Thus even agreed-on assumptions will change over time, and any effort to reach consensus estimates must be designed to be highly flexible and subject to frequent modifications. Hence, it seems inevitable that different reports by different agencies at different times will result in diverse projections of the future. The proposed Interagency Committee, however, should be able to surface and to transmit such changes in assumptions and trends to Federal model builders more quickly.

Department of Agriculture,
Economics, Statistics, and Cooperatives Service

Main Reference—“Introduction to the Economic Projections Program." Agriculture in the Third Century (May 1976), 1. Compiled by Leroy Quance, published by U.S. Department of Agriculture, Economic Research Service.

Department of Commerce,
Bureau of Economic Analysis

Main Reference–Thurow, Lester C., “A Fiscal Policy Model of the United States," pp. 45-64, Survey of Current Business, Vol. 49, 6, June 1969.

Department of Labor, Bureau of Labor Statistics

Main Reference-The Structure of the U.S. Economy in 1980 and 1985, Appendix A, U.S. Bureau of Labor Statistics, Bulletin 1831 (published 1975).

Other References-Barth, Richard C., “The Development of Wage and Price Relationships for a Long-Term Economic Model,” Survey of Current Business, August 1972.

Bowman, Charles T. and Morlan, Terry H., “Revised Projections of the U.S. Economy to 1980 and 1985," Monthly Labor Review, March 1976, pp. 9-21.

Summary of Findings 1. The major forecasts of the national economy

are made by the Bureau of Economic Analysis of the Department of Commerce and the Bureau of Labor Statistics of the Department of Labor. Many other Federal agencies (including the Energy Information Administration, the Environmental Protection Agency, the Economics, Statistics, and Cooperatives Service of the Department of Agriculture, the U.S. Department of the Interior, and the Federal Preparedness Agency of the General Service Administration) prepare long-term forecasts for

more narrowly defined sectors of the economy. 2. There is a high degree of informal coordination

between forecasting groups of various agencies, but there is a growing need for a more formal "Interagency Committee on Long-Term Growth Models," which would meet on a regularly scheduled basis for the timely exchange of information and discussion of technical and data developments of interest to modelers. The Office of Federal Statistical Policy and Standards plans to establish this committee in FY 1979.

Johnston, Denis F., “The U.S. Labor Force Projections to 1990," Monthly Labor Review, July 1973, pp. 3-13.

Kutscher, Ronald E., “Revised BLS Projections to 1980 and 1985: An Overview," Monthly Labor Review, March 1976, pp. 3-8.

Personick, Valerie A. and Robert A. Sylvester, “Evaluation of BLS 1970 Projections,” Monthly Labor Review, August 1976.

Thurow, Lester C., “A Fiscal Policy Model of the United States," pp. 45-64, Survey of Current Business, Vol. 49, 6, June 1969.

Department of Energy, formerly Energy Research and Development Administration

Other References-National Energy Outlook, February 1976, FEA-N-75/713, Federal Energy Administration.

Project Independence Report, FEA, Washington, D.C., GPO No. 4118-00029, November 1974.

General Services Administration,
Federal Preparedness Agency

Main Reference-Devine, Patricia, “The Mathematical Computation Laboratory-Thurow Model." Federal Office of Preparedness, GSA/OP/MCL TR-96.

Main Reference-Behling, D.J., R. Dullien and E. A. Hudson (1976), The Relationship of Energy Growth 10 Economic Growth Under BNL 50500, Upton, New York, Brookhaven National Laboratory.

Other References—Behling, D.J., W. Marcuse, M. Swift, and R. G. Tessman (1975), A Two-Level Iterative Model for Estimating Inter-Fuel Substitution Effects, BNL 19863, Upton, New York, Brookhaven National Laboratory.

Beller, M., ed. (1975), Sourcebook for Energy Assessment, BNL 50483, Upton, New York, Brookhaven National Laboratory.

Carasso, M., J. M. Gallagher, K. J. Sharma, J. R. Gayle, R. Barany (1975), The Energy Supply Planning Model, Volumes I and II, Bechtel Corporation, San Francisco, California.

Cherniavsky, E. A. (1974), Brookhaven Energy System Optimization Model, BNL 19569, Upton, New York, Brookhaven National Laboratory.

Dullien, R. (1976), User's Guide to the DRI LongTerm Interindustry Transactions Model, Interim Report to the U.S. Department of the Interior, Washington, D.C.

Dullien, R. (1974), "Economic Analysis of Alternative Energy Growth Patterns,” Report to the Energy Policy Project, Ford Foundation; published in David Freeman, et al., A Time to Choose, Cambridge, Ballinger, pp. 493-511.

ERDA-48: Vol. I: The Plan, GPO No. (1975) 0579-905.

OBERS Projections

Main Reference-1972 OBERS Projections: Regional Economic Activity in the U.S., Series E Population Vol 1: Concepts, Methodology and Summary Data. Published by the U.S. Water Resources Council, Washington, D.C., GPO No. 5245-0013.

Other References—“Area Economic Projections 1990,” supplement to the 1974 Survey of Current Business U.S. Department of Commerce, GPO No. 003-024-00490-9.

“State Projections of Income, Employment, and Population to 1990,” pp. 19-48, Survey of Current Business Vol. 54, 4, April 1974.

Hudson, E. A. and D. W. Jorgenson (1974a), “U.S. Energy Policy and Economic Growth, 19752000," Report to the Office of Energy and Natural Resources, U.S. Department of the Treasury; published in Bell Journal of Economics and Management Science, Vol. 5, No. 2, Autumn 1974, pp. 461-514, and in International Institute of IIASA Working Seminar on Energy Modelling, Laxenburg, Austria, IIASA, 1974, pp. 174-278.

A National Plan for Energy Research, Demonstration, and Development: Creating Energy Choices for the Future: 1976, Vol. I, ERDA publication 76-1, GPO No. 052-010-00478-6.

General References on Long-Term Economic
Modeling, Projections, and Planning

Choosing Our Environment: Can We Anticipate the Future?, Hearing before the Panel on Environmental Science and Technology, U.S. Senate, 94th Congress, 1st Session, December 15, 1975, Part I: Futures Analysis and the Environment, Serial 94-H31 (64-536 0).

Computer Simulation Methods to Aid National Growth Policy, Staff Report Prepared for the Use of the Subcommittee on Fisheries and Wildlife, Conservation and the Environment of the Committee on Merchant Marine and Fisheries, U.S. House of Representatives by the Futures Research Group, Congressional Research Service, Library of Congress, July 30, 1975, Serial 94-B (56-725 0).

Duncan, Joseph W., "Long-Term Economic Growth Forecasts in the Federal Government," a paper in the study series U.S. Economic Growth from 1975-1985: Prospects Problems, and Patterns, by the Joint Economic Committee, Congress of the United States. 1976.

Federal Energy Administration

Main Reference-Hogan, William W., “Energy Policy Models for Project Independence," Discussion Paper, June 18, 1975, FEA, to appear in the Journal of Computers and Operations Research.

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