0:00:00.612,0:00:02.967 - [Christina] The most important thing[br]that I try to pass on 0:00:02.967,0:00:06.422 is the sense that economics[br]is an empirical field, 0:00:06.422,0:00:08.442 then if you get[br]new empirical evidence, 0:00:08.442,0:00:11.029 you're going to have[br]to change the way 0:00:11.029,0:00:13.050 you think about the economy. 0:00:13.050,0:00:15.220 I think being open to that 0:00:15.220,0:00:18.791 is the most important thing[br]for a young economist to know. 0:00:18.791,0:00:21.646 - [Narrator] Economists --[br]not a group 0:00:21.646,0:00:25.012 with a lot of Marys,[br]Natashas or Juanitas, 0:00:25.012,0:00:27.550 and that's caused[br]a lot of controversy. 0:00:27.550,0:00:31.340 However, what's often overlooked[br]are the actual female economists 0:00:31.340,0:00:33.209 who are pushing economics forward 0:00:33.209,0:00:35.212 by addressing real-world issues. 0:00:35.212,0:00:38.818 Welcome to Women in Economics. 0:00:39.420,0:00:45.829 ♪ [music] ♪ 0:00:45.829,0:00:47.749 - [Christina] I grew up in a family 0:00:47.749,0:00:52.604 where public policy[br]was discussed a lot. 0:00:52.604,0:00:54.641 I was planning to be a lawyer, 0:00:54.641,0:00:58.714 so I was going to major[br]in Government. 0:00:58.714,0:01:01.635 And as part of the Government[br]major at my college, 0:01:01.635,0:01:03.504 you had to take[br]a year of Economics. 0:01:03.504,0:01:07.210 I was about three weeks in,[br]and I was hooked, 0:01:07.210,0:01:11.267 like the government major's gone,[br]the lawyer's gone, 0:01:11.267,0:01:14.389 I was in an Economist. 0:01:14.389,0:01:18.139 - [Narrator] Christina Romer[br]is a macro economic historian. 0:01:18.139,0:01:20.224 She takes the tools[br]of modern economics, 0:01:20.224,0:01:21.895 statistics, and data 0:01:21.895,0:01:25.783 and applies them[br]to historical questions. 0:01:25.783,0:01:29.393 - [James] Christy's researcher[br]agenda throughout her career 0:01:29.393,0:01:32.014 has focused[br]on a course set of topics 0:01:32.014,0:01:36.137 about economic fluctuations[br]and business cycles. 0:01:36.137,0:01:37.557 - [Narrator] She's been asking[br]and answering 0:01:37.557,0:01:40.125 fascinating questions[br]about our economy, 0:01:40.125,0:01:43.944 starting with her dissertation[br]as a graduate student at MIT. 0:01:43.944,0:01:45.614 There, she changed[br]her understanding 0:01:45.614,0:01:49.887 of how the economy[br]has grown over time. 0:01:49.887,0:01:52.461 - [Christina] I think the questions[br]that came to me 0:01:52.461,0:01:55.582 were about monetary policy[br]and business cycles 0:01:55.582,0:01:58.370 and the Great Depression. 0:01:58.370,0:01:59.472 - [Narrator] It was widely believed 0:01:59.472,0:02:03.245 that government policies led to[br]less fluctuations and unemployment 0:02:03.245,0:02:05.248 after World War II. 0:02:05.248,0:02:09.273 However, the data before[br]World War II was unreliable. 0:02:09.273,0:02:11.441 - [Nancy] But Christy came up[br]with the ingenious insight 0:02:11.441,0:02:15.031 that while you couldn't clean up[br]the historical data, 0:02:15.031,0:02:17.319 you could fuzzy up[br]the more modern data, 0:02:17.319,0:02:18.821 and that's exactly what she did. 0:02:18.821,0:02:20.623 And when she did it, lo and behold, 0:02:20.623,0:02:24.329 all these differences[br]basically collapsed. 0:02:24.329,0:02:25.915 - [Narrator] Amazingly,[br]if she applied 0:02:25.915,0:02:28.603 the old techniques to the new data, 0:02:28.603,0:02:30.272 the pose WOrld War II economy 0:02:30.272,0:02:34.496 looked just as volatile[br]as the pre-World War economy. 0:02:34.496,0:02:36.181 This contradicted the consensus 0:02:36.181,0:02:39.787 on the role of government[br]stabilization policies. 0:02:39.787,0:02:43.110 Her research rattled[br]the economic community. 0:02:43.110,0:02:44.896 - [David] It made a splash. 0:02:44.896,0:02:47.818 I remember one of the prominent[br]economist MIT, 0:02:47.818,0:02:49.002 his first reaction was, 0:02:49.002,0:02:51.786 "Well, I'd be very upset[br]about this if I believed it. 0:02:51.786,0:02:54.256 So I'm not going to believe it." 0:02:54.256,0:02:55.704 - [Narrator] Throughout[br]her academic career, 0:02:55.704,0:02:57.577 Christine continued to challenge 0:02:57.577,0:03:00.537 our understanding[br]of the Great Depression. 0:03:00.537,0:03:04.009 As just one example,[br]most economists believed 0:03:04.009,0:03:05.526 the Great Depression ended 0:03:05.526,0:03:07.314 because of higher[br]government spending 0:03:07.314,0:03:10.135 and investment in public works. 0:03:10.135,0:03:13.325 She showed that the impact[br]of those policies 0:03:13.325,0:03:15.193 were relatively small compared to 0:03:15.193,0:03:18.833 the monetary policy[br]changes taking place. 0:03:18.833,0:03:22.489 - [ ] Starting as soon as Roosevelt[br]took the US off the gold standard 0:03:22.489,0:03:24.742 when he took office in 1933, 0:03:24.742,0:03:26.193 over the next decade, 0:03:26.193,0:03:29.066 there's just an enormous increase[br]in money supply. 0:03:29.066,0:03:30.486 What he showed was that 0:03:30.486,0:03:34.375 that is what caused[br]the very rapid growth that we had. 0:03:34.375,0:03:37.129 - [Narrator] Christina's research[br]has often focused on the effect 0:03:37.129,0:03:41.303 economic events have[br]on people's everyday lives. 0:03:41.303,0:03:44.525 - [ ] It's tough to manage to have[br]new ideas on the same thing 0:03:44.525,0:03:46.295 again and again and again. 0:03:46.295,0:03:47.196 One of the remarkable things 0:03:47.196,0:03:48.916 about Christy and David's[br]research program 0:03:48.916,0:03:51.937 is that they have done that[br]very successfully. 0:03:51.937,0:03:53.222 - [Narrator] Over 35 years, 0:03:53.222,0:03:55.942 Christina has done[br]meticulous research, 0:03:55.942,0:04:00.050 frequently, with her collaborator[br]and husband, David Romer. 0:04:00.050,0:04:02.521 - [David] We'll have her paper,[br]and I think it's almost done. 0:04:02.521,0:04:05.109 We've worked really hard on it, 0:04:05.109,0:04:07.496 and each do one last read. 0:04:07.496,0:04:11.101 She says, "You know,[br]I think there's a logical tension 0:04:11.101,0:04:14.207 between where we end up[br]in Section 4b 0:04:14.207,0:04:18.130 and how we set out[br]what we're going to do in Section 2a. 0:04:18.130,0:04:21.169 And I'm thinking, "Oh,[br]no one's going to notice." 0:04:21.169,0:04:26.426 And we spend weeks more[br]on the paper because she's right. 0:04:26.426,0:04:28.563 And the paper gets much better. 0:04:28.563,0:04:31.017 - [ ] One of the remarkable[br]things about her work 0:04:31.017,0:04:36.560 is the coherence that spans[br]literally her graduate school days 0:04:36.560,0:04:38.329 and her work on her dissertation, 0:04:38.329,0:04:40.416 and connects up to some[br]of her most recent work 0:04:40.416,0:04:41.952 on thinking about[br]ways of identifying 0:04:41.952,0:04:43.571 turning points in the economy. 0:04:43.571,0:04:48.079 - [Narrator] Christina's work[br]would be put to the test 0:04:48.079,0:04:52.168 during the devasting crash of 2008, 0:04:52.168,0:04:54.773 when the US economy[br]was in free fall. 0:04:54.773,0:04:56.290 - [Christina] We often[br]described the economy 0:04:56.290,0:04:59.080 as at the edge of a cliff. 0:04:59.080,0:05:01.820 Well, the truth is, we were[br]not only at the edge of a cliff, 0:05:01.820,0:05:03.387 we were headed down. 0:05:03.387,0:05:05.798 - [Narrator] Financial markets[br]were plunging, 0:05:05.798,0:05:09.121 and the risk of contagion[br]from the US to the global economy 0:05:09.121,0:05:10.698 was v ery real. 0:05:10.698,0:05:12.642 - [ ] Even people who'd see a lot 0:05:12.642,0:05:15.063 were really worried[br]about what was happening. 0:05:15.063,0:05:17.967 - [Narrator] Just as[br]the nation was turning 0:05:17.967,0:05:18.797 to President-elect Obama 0:05:18.797,0:05:20.586 to confront the economic crisis, 0:05:20.586,0:05:23.853 a mysterious email[br]showed up in Christina'a inbox 0:05:23.853,0:05:26.908 with the subject line:[br]"Obama Transition." 0:05:26.908,0:05:28.962 - [ ] And I will take[br]a little bit of credit here 0:05:28.962,0:05:31.634 because Christina[br]was just about to delete it, 0:05:31.634,0:05:34.370 and I said, "Why don't you[br]at least google the person." 0:05:34.370,0:05:36.113 And she discovered[br]that he was the head 0:05:36.113,0:05:38.783 of the economic side[br]of the transition. 0:05:38.783,0:05:41.638 The Obama administration[br]wanted to meet with Christina 0:05:41.638,0:05:43.139 as soon as possible. 0:05:43.139,0:05:45.829 - [ ] On the next day,[br]she was on a plane to Chicago 0:05:45.829,0:05:47.698 to meet with the President-elect. 0:05:47.698,0:05:49.183 - [Narrator] Christina[br]was asked to chair 0:05:49.183,0:05:51.555 the Council of Economic Advisers. 0:05:51.555,0:05:52.855 The council was set up 0:05:52.855,0:05:55.928 to bring academics[br]into the policy-making process 0:05:55.928,0:05:58.297 and make recommendations[br]to the President. 0:05:58.297,0:06:00.518 - [Christina] I was talking[br]to Rahm Emanuel, and I said, 0:06:00.518,0:06:02.907 "So tell me again,[br]how did I get this job?" 0:06:02.907,0:06:05.778 And he said, "You were an expert[br]on the Great Depression, 0:06:05.778,0:06:08.748 and we thought we might need one." 0:06:08.748,0:06:13.440 - [Janet] She's tried to understand[br]what caused the Depression, 0:06:13.440,0:06:15.092 what ended the Depression, 0:06:15.092,0:06:18.965 what role monitoring[br]and fiscal policy could play 0:06:18.965,0:06:21.971 and no one could be[br]better positioned to know 0:06:21.971,0:06:24.475 what the right strategy would be. 0:06:24.475,0:06:27.161 - [Christina][br]We were talking to bankers, 0:06:27.161,0:06:29.065 we were talking to employers, 0:06:29.065,0:06:31.636 we were talking to the people 0:06:31.636,0:06:34.039 that where collecting[br]the statistics. 0:06:34.039,0:06:36.411 - [Narrator] Christina's research[br]revealed that the economy 0:06:36.411,0:06:38.664 was even more[br]of a perilous position 0:06:38.664,0:06:40.566 than previously thgoutt. 0:06:40.566,0:06:44.474 She got on the phone with Obama[br]to give him the bad news. 0:06:44.474,0:06:46.793 - [Christina] Saying,[br]you going, this is terrible. 0:06:46.793,0:06:48.113 We've lost three-quarters[br]of a million jobs. 0:06:48.113,0:06:51.034 I'm just going on like this,[br]and finally he stops me 0:06:51.034,0:06:57.295 and he said, "Christy,[br]it's not your fault... yet." 0:06:57.295,0:07:00.332 - [ ] The challenge that Christy[br]and her team members 0:07:00.332,0:07:02.836 on the Economic[br]Advisory Team confronted 0:07:02.836,0:07:06.726 was how large a stimulus[br]the US economy needed 0:07:06.726,0:07:08.947 in order to right the ship 0:07:08.947,0:07:10.332 and trying to calibrate that 0:07:10.332,0:07:12.636 depended critically[br]on the estimates 0:07:12.636,0:07:15.073 of how much bang[br]for the buck you get 0:07:15.073,0:07:18.412 when you use[br]fiscal policy as a tool 0:07:18.412,0:07:20.516 and try to then[br]reinflate the economy. 0:07:20.516,0:07:22.983 - [Narrator] Christina[br]helped design a fiscal package 0:07:22.983,0:07:26.640 that she thought was necessary[br]to get the economy moving. 0:07:26.640,0:07:28.293 - [Gabriel] The American Recovery[br]and Reinvestment Act 0:07:28.293,0:07:29.445 is a piece of legislation 0:07:29.445,0:07:32.449 that was signed[br]in February of 2009, 0:07:32.449,0:07:35.856 and it was a combination[br]of direct government spending, 0:07:35.856,0:07:37.474 so think of repairing highways, 0:07:37.474,0:07:40.129 transfers to State governments, 0:07:40.129,0:07:43.851 transfers to individuals and tax cuts. 0:07:43.851,0:07:46.756 And the rationale for it[br]was for the time 0:07:46.756,0:07:48.625 when households were spending less 0:07:48.625,0:07:50.379 and businesses were spending less -- 0:07:50.379,0:07:51.681 that's a time when it's appropriate 0:07:51.681,0:07:53.350 for government[br]to spend a little more 0:07:53.350,0:07:55.219 to fill in that gap. 0:07:55.219,0:07:58.958 The recessions leave long scars, 0:07:58.958,0:08:01.129 and people who lose[br]their jobs during recessions 0:08:01.129,0:08:02.841 and they're unemployed[br]for a while -- 0:08:02.841,0:08:05.495 even ten years later,[br]often are earning less 0:08:05.495,0:08:08.248 than they were[br]before the recession occurred. 0:08:08.248,0:08:10.103 So by making the case, 0:08:10.103,0:08:13.708 both in academic research[br]and then as a policymaker, 0:08:13.708,0:08:16.881 the government could do more[br]to mitigate recessions 0:08:16.881,0:08:20.803 that really has an impact probably[br]hundreds of thousands of people 0:08:20.803,0:08:23.397 kept their jobs[br]during the Great Recession 0:08:23.397,0:08:28.272 because she had become an expert[br]on the behavior of the economy, 0:08:28.272,0:08:30.426 on the effects of fiscal policy. 0:08:30.426,0:08:36.319 - [ ] And she was really passionate[br]about the role that she played 0:08:36.319,0:08:40.642 after the financial crisis[br]and the Great Recession 0:08:40.642,0:08:44.297 and for passionately, for policies 0:08:44.297,0:08:47.620 that would address[br]the 9 million people 0:08:47.620,0:08:48.756 who lost their jobs 0:08:48.756,0:08:50.976 and get the economy moving. 0:08:50.976,0:08:53.679 - [ ] Christy was a very fortunate person to have in that role 0:08:53.679,0:08:56.301 because much[br]of her work, academically, 0:08:56.301,0:08:58.370 over the 25 years before that, 0:08:58.370,0:09:00.643 had been focused[br]on trying to understand 0:09:00.643,0:09:02.578 the nature of the linkages 0:09:02.578,0:09:05.166 between fiscal policy,[br]monetary policy 0:09:05.166,0:09:06.837 and economic outcomes. 0:09:06.837,0:09:07.837 - [ ] That's an unusual case. 0:09:07.837,0:09:10.257 We can really see[br]a pretty direct connection 0:09:10.257,0:09:16.719 between ivory tower research[br]and real lives on a big scale. 0:09:16.719,0:09:17.937 - [Narrator] Romer's work at Berkeley 0:09:17.937,0:09:20.875 continues to ask and answer[br]these important questions 0:09:20.875,0:09:22.544 about the macroeconomy. 0:09:22.544,0:09:25.615 - [Christina] If you think about[br]what matters to a typical person: 0:09:25.615,0:09:29.622 Do they have a job?[br]Can they support their family? 0:09:29.622,0:09:32.877 Can they give[br]their children a better life 0:09:32.877,0:09:34.063 than they themselves had? 0:09:34.063,0:09:36.534 You realize that economic issues, 0:09:36.534,0:09:38.854 how well the economy operates, 0:09:38.854,0:09:42.360 is probably one of the things[br]that affects people's lives 0:09:42.360,0:09:44.513 more than anything else. 0:09:47.033,0:09:47.868 ♪ [music] ♪ 0:09:47.868,0:09:50.005 - [Narrator] Want to better understand[br]Romer and business cycles? 0:09:50.005,0:09:53.160 Click here for related materials[br]and practice questions, 0:09:53.160,0:09:55.564 or check out other videos[br]and how economists 0:09:55.564,0:09:57.730 are tackling all sorts of issues, 0:09:57.730,0:10:00.484 ranging from weighty topics,[br]such as the macroeconomy, 0:10:00.484,0:10:03.102 to everyday items,[br]like Wikipedia and wine... 0:10:03.262,0:10:05.246 yes, even wine.