Ending months of speculation, the White House announced last night that Freed Professor of Economics N. Gregory Mankiw will be taking over as the chair of President Bush’s Council of Economic Advisors.

The high-profile Harvard economist who is author of one of the most-used economic textbooks in the country has no easy job ahead.

The administration faces a recession, a war and heavy opposition to its proposed tax plan.

The announcement of Mankiw’s new post came in a White House press release, just minutes after current chair R. Glenn Hubbard, who engineered the Bush tax plan, said he would step down at the end of the week.

The announcement apparently came as no surprise to the Harvard economics department.

“We’ve known about this for weeks,” said Lee Professor of Economics Claudia Goldin, who explained that the announcement could not be made until the White House had taken care of formalities. “It’s neither breaking nor news.”

While they say that he will be sorely missed in Cambridge, Mankiw’s colleagues say they have confidence in his ability to advise the president through tough economic times.

“Gregory Mankiw is a terrific economist with a keen interest in public policy,” University President Lawrence H. Summers said through a spokesperson. “Harvard’s temporary loss as he goes on leave will be the country’s gain.”

As a graduate student, Mankiw served as an assistant to Summers, then an economics professor.

Baker Professor of Economics Martin S. Feldstein echoed Summers’ sentiments.

“Greg is a first-rate economist and he will do an excellent job as chair,” said Feldstein, who was chair of the council under President Reagan, while Mankiw was working on the council’s staff in 1982 and 1983.

Feldstein’s introductory course, Social Analysis 10, “Principles of Economics,” uses a textbook by the same name, Principles of Economics, authored by Mankiw.

“He’s a wonderful economist and we’re going to be very sad to lose him,” said Oliver Hart, chair of the economics department.

Three economists, each selected by the president, serve on the Council of Economic Advisors.

Professor of Economics David I. Laibson said the council fills three functions: it operates as a “sounding board” for economic policies proposed by the president; it initiates new ideas and economic policies; and it serves as a liaison between the president and Congress, the public and the United States’s allies.

“Greg Mankiw is a great economist with a clear and insightful understanding of the problems and opportunities that the U.S. economy faces at this time,” Laibson said. “I am glad the economy will be in such good hands.”

Mankiw could not be reached for comment last night.

Several of Mankiw’s students were surprised to learn of the appointment, saying that his departure will leave the economics department short an excellent instructor.

Tina J. Matic ’05, who last year was a member of Mankiw’s seminar on the economist’s view of the world, said she was surprised that he would be leaving Harvard.

“I definitely think he deserves it. He’s brilliant,” Matic said. “He’s probably the best teacher I’ve had here.”

Arturo E. Brillembourg ’04, who took Economics 1011b, “Macroeconomic Theory,” in spring of 2000 when it was co-taught by Mankiw, called his former instructor “very capable as a teacher and as a professor.”

Mankiw has supported Bush’s economic policies in the past.

Earlier in the month, he co-signed a letter with dozens of other academics, “enthusiastically” endorsing Bush’s stimulus package.

Mankiw succeeds Hubbard, who helped craft the $695 billion tax-cut plan that the president proposed last month—and who steps down as Bush’s administration attempts to convince Congress to approve the stimulus package.

Over the past several months, Bush has replaced key members of his economic staff.

Former Treasury Secretary Paul H. O’Neill and former economic advisor Lawrence B. Lindsey both resigned in December, while former Securities and Exchange Commission chair Harvey L. Pitt stepped down in November.

—Staff writer Alexander J. Blenkinsopp can be reached at blenkins@fas.harvard.edu.