Conference on the Economics of Federal Credit Activity, Part I

CONFERENCE ON THE ECONOMICS OF FEDERAL CREDIT ACTIVITY PART I ? PROCEEDINGS April 10-11, 1980

The Congress of the United States Congressional Budget Office

PREFACE

At the request of the House Budget Committee's Task Force on the Budget Process and the House Banking Committee's Subcommittee on Economic Stabilization, the Congressional Budget Office (CBO) conducted a conference on the Economics of Federal Credit Activity on April 10-11, 1980, in Washington, D.C.

Knowledge of the. economic consequences of federal credit activity--in particular, the consequences of direct loans and loan guarantees--is fragmented and incomplete. Recent events have emphasized the need to improve understanding of the effects of credit programs on economic activity and the capital markets.

In 1980, for the first time, an Administration has proposed and the Congress has considered targets for the total level of federal credit. These first steps toward a federal credit budget reflect a realization that current budget techniques, with their focus on direct spending and taxes, have not provided adequate means of controlling the annual levels of federal credit programs, which have grown more rapidly in recent years than have direct expenditures.

The conference had two goals. The first was to encourage empirical research into the economic effects of federal credit. The papers prepared for the conference represent a first step toward filling in understanding of the effects of credit programs. The second goal was to bring together researchers with an interest in federal credit and those who operate federal credit programs, to stimulate dialogue between researchers and policymakers. CBO believes the conference was successful in achieving both goals.

The proceedings of the conference are being published in two parts. This volume, Part I, contains the summaries of the prepared papers by their authors, the formal comments offered by the discussants, and the discussion between the authors, discussants, and members of the audience for each of the conference's topical sessions. The first session presents an overview of federal credit activity and the issues it raises. It also contains a brief summary of the papers and the discussion presented in the seven

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