• The CEA was established by the Employment Act of 1946
  • It provides the President with objective economic analysis and advice on the develpoment of a wide range of domestic and international economic policy issues.
  • In its first seven years the CEA made five technical advances in policy making including:
    • The replacement of a "cyclical model" of the economy by a "growth model,"
    • The setting of quantitative targets for the economy
    • The use of the theories of fiscal drag and full-employment budget
    • The recognition of the need for greater flexibility in taxation
    • The replacement of the notion of unemployment as a structural problem by a realization of a low aggregate demand