MA (Econ), 1969
"President Clinton read everything we sent him and was interested in economic issues and in finding the right policies. We were blessed by good luck and good policy and the economy performed superbly, extraordinary job growth and rising living standards across the board. It was a wonderful time to be an economic adviser.”
Martin Neil Baily prepared for his journey by completing a master’s degree in economics at SFU in 1969 and started an outstanding career conducting research and influencing policies, governments, and the public. He has held positions such as the associate editor of the Journal of Economic Perspectives, a senior fellow at the Peterson Institute, an academic advisor to the Congressional Budget Office, and many more. He is best known for his tenure as cabinet member, and subsequently, the chairman of President Clinton's Council of Economic Advisors.
After completing his bachelor degree at Christ’s college, Cambridge (UK), Baily went to SFU and continued onto his Ph.D. at MIT (USA). Baily’s current research focuses on financial regulation, growth, and how to speed recovery. In recent years, he is looking at the impact of new technology. He said “One of the biggest puzzle in economics today is to understand why the rapid pace of technological change that we see all standards.”
As part of the Council of Economic Advisers, he advised the President of the United State on economic policy. From 1999-2001, Baily was the chairman of the Council and the US economy was prospering. Baily also emphasized the important role of the council, “although there are always political pressures, the Council has preserved its credibility by giving objective advice.”
When Baily rejoined the Brooking Institution in 2007, William G. Gale, Brookings Vice President, said, “Martin's work is held in the highest esteem by both policy-makers and professional economists." The Brooking Institution is a public policy think tank and was ranked the number 1 think tank in the world by the 2015 Global Go To Think Tank Index Report. Now as the Director of the Initiative on Business and the Economy and Bernard L. Schwartz Chair of Economic Policy Development, Baily leads his team to work on two main areas of research: financial regulation, and growth and competitiveness.
“Financial regulation became a topic of increased importance following the financial crisis of 2007-09 as Congress and regulators sought to understand the crisis and then determine what reforms were needed to reduce the chances of a repetition of the crisis.” Baily said.
Baily worked with a task force, organized by the Pew Charitable Trust, to create a new regulatory framework as a response to the Great Recession in the late 2000. The Dodd-Frank Act was established in 2009 and the new regulations should encourage financial stability and accountability in the US financial system. As the Co-Chair of the Financial Regulatory Reform Initiative at the Bipartisan Policy Center, Baily has been assessing how well the Act meets its goals. He said he is looking at “whether it [the Dodd-Frank Act] has been effective in reducing risk; and whether it has created costs that may be limiting economic growth.”
Another research area Baily has worked on is productivity growth. “It has become clear that US productivity growth has slowed markedly since around 2004, which has resulted in wage stagnation and which makes federal budgeting much more difficult.” Baily continues, “The problem of slow growth is one that the United States shares with Canada, Europe and Japan.” Baily’s team are investigating the causes of slow productivity growth and exploring policies that could alleviate this problem.
For students who are interested in perusing a career in research, Baily recommends to incorporate a realistic view of human behavior into their work. He explains: “I love economics and I am proud of my career. At the same time, I am concerned that economics is now so dominated by mathematics. Human behavior does not always accord with our models, as we learned in the financial crisis.” So he suggests: “any students wanting to go into economics today must polish their math skills, but they should not lose sight of a broader reality.
-Written by the Department of Economics
Published in August 2016
Submitted by: Rebecca Ho