The Report of the is of necessity a somewhat schizophrenic document. This is so because the Employment Act of 1946 (which called it into being) ordains that it seek to serve two purposes that are not entirely compatible. On the one hand, it is an apology for the President's economic program, prepared by the and a Council of Advisers appointed by him for no fixed term. In this role, it seeks to show that the economic policies of the and his party will be successful (and, if the incumbent president has already been in office for a year or more, have already begun to be successful) in solving the grievous problems created by the foolish mistakes made by the other party when it was last in power. On the other hand, it is a professional economic report on the American economy and related public policy, prepared by three leading professional economists. These three economic advisers are chosen from among those who have devoted their previous careers (and will in all likelihood devote their subsequent careers) primarily to teaching and/or research in economics. In this role, the Report seeks to present to the Congress and the public an analysis that is competent by the standards of the economics profession, describing and assessing the present state of the American economy, how it came to be the way it is, and how it can and cannot be changed by public policy especially at the federal level. I believe this schizophrenia is unavoidable, unless the rules are changed either so that the has no professional economists as advisers, or so that an independent body of professional economists is constituted and charged with issuing reports on the economy and public policy without being responsible to any elected official. Neither of these changes in the rules would be desirable. The first would deprive the President, the Congress, and the public of the competence and discipline offered by professional economic standards. The second would divorce the President's economic advice from the different but equally important discipline of the political arena. The 1973 Report, like its predecessors from 1949 onwards, consists of three very different components. The first is the Economic Report of the President proper, addressed to the Congress and signed by the President. Mr. Nixon's 1973 report, like his 1972 report, is just 5 pages long. The second is the Annual Report of the Council of Advisers, addressed to the and signed by the Council. The 1973 version, by Herbert Stein, chairman, Ezra Solomon, and Marina v.N. Whitman, is 174 pages long, including two appendices. It is in this second part that the schizophrenia is most evident. The third is a statistical Appendix, con* The Johns Hopkins University. I am indebted to my colleagues, Louis Maccini and Jurg Niehans, for valuable comments on an earlier draft, and to Mary Anne Matthews for drawing Figure 1.

The Securities Exchange Act of 1934 was one of the earliest and, some believe, one of the most successful laws enacted by the New Deal. The stock market crash in 1929 and the Great Depression provided the impetus for reform of the stock markets in the belief that weaknesses of the institutions and ineptitude and/or chicanery among brokers and bankers were partially responsible for the losses incurred by stockholders. Although many critics, reformers and congressmen wanted Congress to enact blue skies legislation that would require all securities sold and traded to be approved by the federal government, President Franklin Roosevelt preferred the concept of (see Francis Wheat (1967)). Rather than having the government approve or disapprove securities, corporations whose securities are publicly sold and traded are required to disclose a large amount of predominantly financial information to the Securities and Exchange Commission (SEC) who make these data available to the public. Indeed, the Securities Exchange Act is described in its title and usually referred to as a statute. Although the financial community generally opposed this legislation and the preceding Securities Act of 1933,1 most brokers, investors and government officials probably would find it difficult to conceive of the successful operation of the stock markets without the Securities Acts. Yet the economic rationale for the regulation of the securities markets was not examined carefully before the legislation was passed (which is not surprising, given turbulent times) nor has it been since,2 even though the Securities Act of 1934 was extended in 1964 to include most corporations whose stock is publicly owned. Such an examination of one important part of the law-the financial disclosure requirements-is presented here. This analysis is particularly timely because the SEC appears to be shifting its emphasis towards increasing the disclosure requirements of almost all corporations whose stock is traded in the markets.3

The 1973 Economic Report of the President devotes an entire chapter (ch. 4) to the economic role of women in the United States. In this chapter, the Report recognizes that economic discrimination against women exists and, by the length and thoroughness of the analysis describing its dimensions and consequences, implies that such discrimination constitutes a serious economic (and social) problem. The Report does not attempt to minimize the extent to which job segregation, earnings differentials, higher unemployment rates exist, and the lack of improvement in each component over the last few decades. As economists, we are particularly pleased to have the official imprimatur of an Economic Report on the view that discrimination does indeed exist. Some economists have the tendency to minimize the importance of nonpecuniary forces in influencing decisions made within the firm, and have been reluctant to admit the possibility of discrimination unrelated to real or perceived productivity differences. We believe that a proper analysis of discrimination is yet to come; such an analysis will have to fuse elements of economics, sociology, psychology, and history. Employers do refuse to hire women for certain occupations. Instead they hire men exclusively and pay them more than they would have to pay women of equal ability. The court records are now full of such cases,' but such data will never be explained on the basis of a model which includes in the objective function of the employer only monetary profits. Nor can models which assume that employers' decisions about hiring are based on inborn, unchanging, unexplained tastes do justice to the social forces, both internal and external to the firm, which bear on such decisions. Specifically, it is well known that the average woman college graduate who works full time all year ends up with about the same income as the average male high school dropout. The gross earnings differential works out to be between 35 and 57 percent, depending on the data base used to make the calculation. The Report puts the differential due to discrimination at about 20 percent, but this seems low. In a recent article, Isabel Sawhill reviewed seven econometric studies of male-female earnings patterns. In six of them,2 the differences which could be attributed to discrimination were above 29 percent and ranged up to 43 percent. The seventh study3 estimated the difference which might be attributable to discrimination as 12 percent, but arrived at this figure by classifying as nondiscriminatory the differences in the distribution of men and women among detailed occupations. Since

This paper reports the results of an empirical study of real output-inflation tradeoffs, based on annual time-series from eighteen countries over the years 1951-67. These data are examined from the point of view of the hypothesis that average real output levels are invariant under changes in the time pattern of the of inflation, or that there exists a rate of real output. That is, we are concerned with the questions (i) does the natural lead to expressions of the output-inflation relationship which perform satisfactorily in an econometric sense for all, or most, of the countries in the sample, (ii) what testable restrictions does the impose on this relationship, and (iii) are these restrictions consistent with recent experience? Since the term 'natural theory refers to varied aggregation of models and verbal developments,' it may be helpful to sketch the key elements of the particular version used in this paper. The first essential presumption is that nominal output is determined on the aggregate demand side of the economy, with the division into real output and the price level largely dependent on the behavior of suppliers of labor and goods. The second is that the partial rigidities which dominate shortrun supply behavior result from suppliers' lack of information on some of the prices relevant to their decisions. The third presumption is that inferences on these relevant, unobserved prices are made optimally (or rationally) in light of the stochastic character of the economy. As I have argued elsewhere (1972), theories developed along these lines will not place testable restrictions on the coefficients of estimated Phillips curves or other single equation expressions of the tradeoff. They will not, for example, imply that money wage changes are linked to price level changes with a unit coefficient, or that {long-run' (in the usual distributed lag sense) Phillips curves must be vertical. They will (as we shall see below) link supply parameters to parameters governing the stochastic nature of demand shifts. The fact that the implications of the natural come in this form suggests an attempt to test it using a sample, such as the one employed in this study, in which a wide variety of aggregate demand behavior is exhibited. In the following section, a simple aggregative model will be constructed using the elements sketched above. Results based on this model are reported in Section II, followed by a discussion and conclusions

This paper develops a approach to the theory of currency devaluation.1 The approach is monetary in several respects. The role of the real balance effect is emphasized and a distinction is drawn between the relative prices of goods, the exchange rate and the price of money in terms of goods. Furthermore, money is treated as a capital asset so that the expenditure effects induced by a change are spread out over time and depend on the preferred rate of adjustment of real balances.2 The latter aspect gives rise to the analytical distinction between impact and long-run effects of a devaluation. The first part of this paper develops a one-commodity and two-country model of devaluation. The simplicity of that structure is chosen quite deliberately to emphasize the aspect of the problem as opposed to the derivative effects that arise from induced changes in relative commodity prices. Trade is viewed as the exchange of goods for money or a means of redistributing the world supply of assets. A devaluation is shown to give rise to a change in the level of trade and the terms of trade, the price of money in terms of goods. In the second part the implications of the existence of nontraded goods are investigated, and induced changes in the relative prices of home goods enter the analysis