The Troika process: Economic models and macroeconomic policy in the USA

In the executive branch of the U.S. Federal government, a group known as the Troika -- comprised of senior officials of the President’s Council of Economic Advisers, the Department of the Treasury, and the Office of Management and Budget -- plays an important role in developing the economic agenda for each Administration. The Troika develops the economic assumptions underlying the Administration’s budget proposals including an assessment of current economic conditions and forecasts for key economic indicators. It meets regularly to address a variety of policy issues, to evaluate and modify the Administration’s forecasts, and to monitor the current stance of fiscal and monetary policies relative to the economy’s position in the business cycle. This paper provides an overview of the Troika process and the role of empirical models in the development of the fiscal policies and macroeconomic forecasts of the U.S. government.