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