WEBVTT 00:00:00.382 --> 00:00:02.737 - [Christina] The most important thing that I try to pass on 00:00:02.737 --> 00:00:06.192 is the sense that economics is an empirical field, 00:00:06.192 --> 00:00:08.212 then if you get new empirical evidence, 00:00:08.212 --> 00:00:10.799 you're going to have to change the way 00:00:10.799 --> 00:00:12.820 you think about the economy. 00:00:12.820 --> 00:00:14.990 I think being open to that 00:00:14.990 --> 00:00:18.561 is the most important thing for a young economist to know. 00:00:18.561 --> 00:00:21.416 - [Narrator] Economists -- not a group 00:00:21.416 --> 00:00:24.782 with a lot of Marys, Natashas or Juanitas, 00:00:24.782 --> 00:00:27.320 and that's caused a lot of controversy. 00:00:27.320 --> 00:00:31.110 However, what's often overlooked are the actual female economists 00:00:31.110 --> 00:00:32.979 who are pushing economics forward 00:00:32.979 --> 00:00:34.982 by addressing real-world issues. 00:00:34.982 --> 00:00:38.588 Welcome to Women in Economics. 00:00:39.190 --> 00:00:45.599 ♪ [music] ♪ 00:00:45.599 --> 00:00:47.519 - [Christina] I grew up in a family 00:00:47.519 --> 00:00:52.374 where public policy was discussed a lot. 00:00:52.374 --> 00:00:54.411 I was planning to be a lawyer, 00:00:54.411 --> 00:00:58.484 so I was going to major in Government. 00:00:58.484 --> 00:01:01.405 And as part of the Government major at my college, 00:01:01.405 --> 00:01:03.274 you had to take a year of Economics. 00:01:03.274 --> 00:01:06.980 I was about three weeks in, and I was hooked, 00:01:06.980 --> 00:01:11.037 like the government major's gone, the lawyer's gone, 00:01:11.037 --> 00:01:14.159 I was in an Economist. 00:01:14.159 --> 00:01:17.909 - [Narrator] Christina Romer is a macro economic historian. 00:01:17.909 --> 00:01:19.994 She takes the tools of modern economics, 00:01:19.994 --> 00:01:21.665 statistics, and data 00:01:21.665 --> 00:01:25.553 and applies them to historical questions. 00:01:25.553 --> 00:01:29.163 - [James] Christy's researcher agenda throughout her career 00:01:29.163 --> 00:01:31.784 has focused on a course set of topics 00:01:31.784 --> 00:01:35.907 about economic fluctuations and business cycles. 00:01:35.907 --> 00:01:37.327 - [Narrator] She's been asking and answering 00:01:37.327 --> 00:01:39.895 fascinating questions about our economy, 00:01:39.895 --> 00:01:43.714 starting with her dissertation as a graduate student at MIT. 00:01:43.714 --> 00:01:45.384 There, she changed her understanding 00:01:45.384 --> 00:01:49.657 of how the economy has grown over time. 00:01:49.657 --> 00:01:52.231 - [Christina] I think the questions that came to me 00:01:52.231 --> 00:01:55.352 were about monetary policy and business cycles 00:01:55.352 --> 00:01:58.140 and the Great Depression. 00:01:58.140 --> 00:01:59.242 - [Narrator] It was widely believed 00:01:59.242 --> 00:02:03.015 that government policies led to less fluctuations and unemployment 00:02:03.015 --> 00:02:05.018 after World War II. 00:02:05.018 --> 00:02:09.043 However, the data before World War II was unreliable. 00:02:09.043 --> 00:02:11.211 - [Nancy] But Christy came up with the ingenious insight 00:02:11.211 --> 00:02:14.801 that while you couldn't clean up the historical data, 00:02:14.801 --> 00:02:17.089 you could fuzzy up the more modern data, 00:02:17.089 --> 00:02:18.591 and that's exactly what she did. 00:02:18.591 --> 00:02:20.393 And when she did it, lo and behold, 00:02:20.393 --> 00:02:24.099 all these differences basically collapsed. 00:02:24.099 --> 00:02:25.685 - [Narrator] Amazingly, if she applied 00:02:25.685 --> 00:02:28.373 the old techniques to the new data, 00:02:28.373 --> 00:02:30.042 the pose WOrld War II economy 00:02:30.042 --> 00:02:34.266 looked just as volatile as the pre-World War economy. 00:02:34.266 --> 00:02:35.951 This contradicted the consensus 00:02:35.951 --> 00:02:39.557 on the role of government stabilization policies. 00:02:39.557 --> 00:02:42.880 Her research rattled the economic community. 00:02:42.880 --> 00:02:44.666 - [David] It made a splash. 00:02:44.666 --> 00:02:47.588 I remember one of the prominent economist MIT, 00:02:47.588 --> 00:02:48.772 his first reaction was, 00:02:48.772 --> 00:02:51.556 "Well, I'd be very upset about this if I believed it. 00:02:51.556 --> 00:02:54.026 So I'm not going to believe it." 00:02:54.026 --> 00:02:55.474 - [Narrator] Throughout her academic career, 00:02:55.474 --> 00:02:57.347 Christine continued to challenge 00:02:57.347 --> 00:03:00.307 our understanding of the Great Depression. 00:03:00.307 --> 00:03:03.779 As just one example, most economists believed 00:03:03.779 --> 00:03:05.296 the Great Depression ended 00:03:05.296 --> 00:03:07.084 because of higher government spending 00:03:07.084 --> 00:03:09.905 and investment in public works. 00:03:09.905 --> 00:03:13.095 She showed that the impact of those policies 00:03:13.095 --> 00:03:14.963 were relatively small compared to 00:03:14.963 --> 00:03:18.603 the monetary policy changes taking place. 00:03:18.603 --> 00:03:22.259 - [ ] Starting as soon as Roosevelt took the US off the gold standard 00:03:22.259 --> 00:03:24.512 when he took office in 1933, 00:03:24.512 --> 00:03:25.963 over the next decade, 00:03:25.963 --> 00:03:28.836 there's just an enormous increase in money supply. 00:03:28.836 --> 00:03:30.256 What he showed was that 00:03:30.256 --> 00:03:34.145 that is what caused the very rapid growth that we had. 00:03:34.145 --> 00:03:36.899 - [Narrator] Christina's research has often focused on the effect 00:03:36.899 --> 00:03:41.073 economic events have on people's everyday lives. 00:03:41.073 --> 00:03:44.295 - [ ] It's tough to manage to have new ideas on the same thing 00:03:44.295 --> 00:03:46.065 again and again and again. 00:03:46.065 --> 00:03:46.966 One of the remarkable things 00:03:46.966 --> 00:03:48.686 about Christy and David's research program 00:03:48.686 --> 00:03:51.707 is that they have done that very successfully. 00:03:51.707 --> 00:03:52.992 - [Narrator] Over 35 years, 00:03:52.992 --> 00:03:55.712 Christina has done meticulous research, 00:03:55.712 --> 00:03:59.820 frequently, with her collaborator and husband, David Romer. 00:03:59.820 --> 00:04:02.291 - [David] We'll have her paper, and I think it's almost done. 00:04:02.291 --> 00:04:04.879 We've worked really hard on it, 00:04:04.879 --> 00:04:07.266 and each do one last read. 00:04:07.266 --> 00:04:10.871 She says, "You know, I think there's a logical tension 00:04:10.871 --> 00:04:13.977 between where we end up in Section 4b 00:04:13.977 --> 00:04:17.900 and how we set out what we're going to do in Section 2a. 00:04:17.900 --> 00:04:20.939 And I'm thinking, "Oh, no one's going to notice." 00:04:20.939 --> 00:04:26.196 And we spend weeks more on the paper because she's right. 00:04:26.196 --> 00:04:28.333 And the paper gets much better. 00:04:28.333 --> 00:04:30.787 - [ ] One of the remarkable things about her work 00:04:30.787 --> 00:04:36.330 is the coherence that spans literally her graduate school days 00:04:36.330 --> 00:04:38.099 and her work on her dissertation, 00:04:38.099 --> 00:04:40.186 and connects up to some of her most recent work 00:04:40.186 --> 00:04:41.722 on thinking about ways of identifying 00:04:41.722 --> 00:04:43.341 turning points in the economy. 00:04:43.341 --> 00:04:47.849 - [Narrator] Christina's work would be put to the test 00:04:47.849 --> 00:04:51.938 during the devasting crash of 2008, 00:04:51.938 --> 00:04:54.543 when the US economy was in free fall. 00:04:54.543 --> 00:04:56.060 - [Christina] We often described the economy 00:04:56.060 --> 00:04:58.850 as at the edge of a cliff. 00:04:58.850 --> 00:05:01.590 Well, the truth is, we were not only at the edge of a cliff, 00:05:01.590 --> 00:05:03.157 we were headed down. 00:05:03.157 --> 00:05:05.568 - [Narrator] Financial markets were plunging, 00:05:05.568 --> 00:05:08.891 and the risk of contagion from the US to the global economy 00:05:08.891 --> 00:05:10.468 was v ery real. 00:05:10.468 --> 00:05:12.412 - [ ] Even people who'd see a lot 00:05:12.412 --> 00:05:14.833 were really worried about what was happening. 00:05:14.833 --> 00:05:17.737 - [Narrator] Just as the nation was turning 00:05:17.737 --> 00:05:18.567 to President-elect Obama 00:05:18.567 --> 00:05:20.356 to confront the economic crisis, 00:05:20.356 --> 00:05:23.623 a mysterious email showed up in Christina'a inbox 00:05:23.623 --> 00:05:26.678 with the subject line: "Obama Transition." 00:05:26.678 --> 00:05:28.732 - [ ] And I will take a little bit of credit here 00:05:28.732 --> 00:05:31.404 because Christina was just about to delete it, 00:05:31.404 --> 00:05:34.140 and I said, "Why don't you at least google the person." 00:05:34.140 --> 00:05:35.883 And she discovered that he was the head 00:05:35.883 --> 00:05:38.553 of the economic side of the transition. 00:05:38.553 --> 00:05:41.408 The Obama administration wanted to meet with Christina 00:05:41.408 --> 00:05:42.909 as soon as possible. 00:05:42.909 --> 00:05:45.599 - [ ] On the next day, she was on a plane to Chicago 00:05:45.599 --> 00:05:47.468 to meet with the President-elect. 00:05:47.468 --> 00:05:48.953 - [Narrator] Christina was asked to chair 00:05:48.953 --> 00:05:51.325 the Council of Economic Advisers. 00:05:51.325 --> 00:05:52.625 The council was set up 00:05:52.625 --> 00:05:55.698 to bring academics into the policy-making process 00:05:55.698 --> 00:05:58.067 and make recommendations to the President. 00:05:58.067 --> 00:06:00.288 - [Christina] I was talking to Rahm Emanuel, and I said, 00:06:00.288 --> 00:06:02.677 "So tell me again, how did I get this job?" 00:06:02.677 --> 00:06:05.548 And he said, "You were an expert on the Great Depression, 00:06:05.548 --> 00:06:08.518 and we thought we might need one." 00:06:08.518 --> 00:06:13.210 - [Janet] She's tried to understand what caused the Depression, 00:06:13.210 --> 00:06:14.862 what ended the Depression, 00:06:14.862 --> 00:06:18.735 what role monitoring and fiscal policy could play 00:06:18.735 --> 00:06:21.741 and no one could be better positioned to know 00:06:21.741 --> 00:06:24.245 what the right strategy would be. 00:06:24.245 --> 00:06:26.931 - [Christina] We were talking to bankers, 00:06:26.931 --> 00:06:28.835 we were talking to employers, 00:06:28.835 --> 00:06:31.406 we were talking to the people 00:06:31.406 --> 00:06:33.809 that where collecting the statistics. 00:06:33.809 --> 00:06:36.181 - [Narrator] Christina's research revealed that the economy 00:06:36.181 --> 00:06:38.434 was even more of a perilous position 00:06:38.434 --> 00:06:40.336 than previously thgoutt. 00:06:40.336 --> 00:06:44.244 She got on the phone with Obama to give him the bad news. 00:06:44.244 --> 00:06:46.563 - [Christina] Saying, you going, this is terrible. 00:06:46.563 --> 00:06:47.883 We've lost three-quarters of a million jobs. 00:06:47.883 --> 00:06:50.804 I'm just going on like this, and finally he stops me 00:06:50.804 --> 00:06:57.065 and he said, "Christy, it's not your fault... yet." 00:06:57.065 --> 00:07:00.102 - [ ] The challenge that Christy and her team members 00:07:00.102 --> 00:07:02.606 on the Economic Advisory Team confronted 00:07:02.606 --> 00:07:06.496 was how large a stimulus the US economy needed 00:07:06.496 --> 00:07:08.717 in order to right the ship 00:07:08.717 --> 00:07:10.102 and trying to calibrate that 00:07:10.102 --> 00:07:12.406 depended critically on the estimates 00:07:12.406 --> 00:07:14.843 of how much bang for the buck you get 00:07:14.843 --> 00:07:18.182 when you use fiscal policy as a tool 00:07:18.182 --> 00:07:20.286 and try to then reinflate the economy. 00:07:20.286 --> 00:07:22.753 - [Narrator] Christina helped design a fiscal package 00:07:22.753 --> 00:07:26.410 that she thought was necessary to get the economy moving. 00:07:26.410 --> 00:07:28.063 - [Gabriel] The American Recovery and Reinvestment Act 00:07:28.063 --> 00:07:29.215 is a piece of legislation 00:07:29.215 --> 00:07:32.219 that was signed in February of 2009, 00:07:32.219 --> 00:07:35.626 and it was a combination of direct government spending, 00:07:35.626 --> 00:07:37.244 so think of repairing highways, 00:07:37.244 --> 00:07:39.899 transfers to State governments, 00:07:39.899 --> 00:07:43.621 transfers to individuals and tax cuts. 00:07:43.621 --> 00:07:46.526 And the rationale for it was for the time 00:07:46.526 --> 00:07:48.395 when households were spending less 00:07:48.395 --> 00:07:50.149 and businesses were spending less -- 00:07:50.149 --> 00:07:51.451 that's a time when it's appropriate 00:07:51.451 --> 00:07:53.120 for government to spend a little more 00:07:53.120 --> 00:07:54.989 to fill in that gap. 00:07:54.989 --> 00:07:58.728 The recessions leave long scars, 00:07:58.728 --> 00:08:00.899 and people who lose their jobs during recessions 00:08:00.899 --> 00:08:02.611 and they're unemployed for a while -- 00:08:02.611 --> 00:08:05.265 even ten years later, often are earning less 00:08:05.265 --> 00:08:08.018 than they were before the recession occurred. 00:08:08.018 --> 00:08:09.873 So by making the case, 00:08:09.873 --> 00:08:13.478 both in academic research and then as a policymaker, 00:08:13.478 --> 00:08:16.651 the government could do more to mitigate recessions 00:08:16.651 --> 00:08:20.573 that really has an impact probably hundreds of thousands of people 00:08:20.573 --> 00:08:23.167 kept their jobs during the Great Recession 00:08:23.167 --> 00:08:28.042 because she had become an expert on the behavior of the economy, 00:08:28.042 --> 00:08:30.196 on the effects of fiscal policy. 00:08:30.196 --> 00:08:36.089 - [ ] And she was really passionate about the role that she played 00:08:36.089 --> 00:08:40.412 after the financial crisis and the Great Recession 00:08:40.412 --> 00:08:44.067 and for passionately, for policies 00:08:44.067 --> 00:08:47.390 that would address the 9 million people 00:08:47.390 --> 00:08:48.526 who lost their jobs 00:08:48.526 --> 00:08:50.746 and get the economy moving. 00:08:50.746 --> 00:08:53.449 - [ ] Christy was a very fortunate person to have in that role 00:08:53.449 --> 00:08:56.071 because much of her work, academically, 00:08:56.071 --> 00:08:58.140 over the 25 years before that, 00:08:58.140 --> 00:09:00.413 had been focused on trying to understand 00:09:00.413 --> 00:09:02.348 the nature of the linkages 00:09:02.348 --> 00:09:04.936 between fiscal policy, monetary policy 00:09:04.936 --> 00:09:06.607 and economic outcomes. 00:09:06.607 --> 00:09:07.607 - [ ] That's an unusual case. 00:09:07.607 --> 00:09:10.027 We can really see a pretty direct connection 00:09:10.027 --> 00:09:16.489 between ivory tower research and real lives on a big scale. 00:09:16.489 --> 00:09:17.707 - [Narrator] Romer's work at Berkeley 00:09:17.707 --> 00:09:20.645 continues to ask and answer these important questions 00:09:20.645 --> 00:09:22.314 about the macroeconomy. 00:09:22.314 --> 00:09:25.385 - [Christina] If you think about what matters to a typical person: 00:09:25.385 --> 00:09:29.392 Do they have a job? Can they support their family? 00:09:29.392 --> 00:09:32.647 Can they give their children a better life 00:09:32.647 --> 00:09:33.833 than they themselves had? 00:09:33.833 --> 00:09:36.304 You realize that economic issues, 00:09:36.304 --> 00:09:38.624 how well the economy operates, 00:09:38.624 --> 00:09:42.130 is probably one of the things that affects people's lives 00:09:42.130 --> 00:09:44.283 more than anything else. 00:09:46.803 --> 00:09:47.638 ♪ [music] ♪ 00:09:47.638 --> 00:09:49.775 - [Narrator] Want to better understand Romer and business cycles? 00:09:49.775 --> 00:09:52.930 Click here for related materials and practice questions, 00:09:52.930 --> 00:09:55.334 or check out other videos and how economists 00:09:55.334 --> 00:09:57.500 are tackling all sorts of issues, 00:09:57.500 --> 00:10:00.254 ranging from weighty topics, such as the macroeconomy, 00:10:00.254 --> 00:10:02.872 to everyday items, like Wikipedia and wine... 00:10:03.032 --> 00:10:05.016 yes, even wine.