0:00:00.382,0:00:02.999 - [Christina] The most important thing[br]that I try to pass on 0:00:02.999,0:00:06.192 is the sense that economics[br]is an empirical field, 0:00:06.192,0:00:08.580 and if you get[br]new empirical evidence, 0:00:08.580,0:00:10.799 you're going to have[br]to change the way 0:00:10.799,0:00:12.820 you think about the economy. 0:00:12.820,0:00:14.990 I think being open to that 0:00:14.990,0:00:18.023 is the most important thing[br]for a young economist to know. 0:00:18.023,0:00:19.583 ♪ [music] ♪ 0:00:19.583,0:00:22.677 - [Narrator] Economists --[br]not a group with a lot of Marys, 0:00:22.677,0:00:24.782 Natashas or Juanitas, 0:00:24.782,0:00:27.320 and that's caused[br]a lot of controversy. 0:00:27.320,0:00:31.110 However, what's often overlooked[br]are the actual female economists 0:00:31.110,0:00:34.982 who are pushing economics forward[br]by addressing real-world issues. 0:00:35.610,0:00:38.118 Welcome to Women in Economics. 0:00:45.507,0:00:48.007 - [Christina] I grew up in a family 0:00:48.007,0:00:51.295 where public policy[br]was discussed a lot. 0:00:52.374,0:00:54.411 I was planning to be a lawyer, 0:00:55.547,0:00:57.735 so I was going to major[br]in Government. 0:00:58.484,0:01:01.405 And as part of the Government[br]major at my college, 0:01:01.405,0:01:03.383 you had to take[br]a year of Economics. 0:01:04.251,0:01:06.980 I was about three weeks in,[br]and I was hooked, 0:01:06.980,0:01:11.037 like the Government major's gone,[br]the lawyer's gone -- 0:01:11.037,0:01:12.688 I was an economist. 0:01:14.159,0:01:17.174 - [Narrator] Christina Romer[br]is a macroeconomic historian. 0:01:17.909,0:01:19.994 She takes the tools[br]of modern economics, 0:01:19.994,0:01:21.665 statistics and data 0:01:21.665,0:01:23.886 and applies them[br]to historical questions. 0:01:25.553,0:01:28.397 - [James] Christy's research[br]agenda throughout her career 0:01:28.397,0:01:31.784 has focused[br]on a core set of topics 0:01:31.784,0:01:35.807 about economic fluctuations[br]and business cycles. 0:01:35.807,0:01:37.592 - [Narrator] She's been asking[br]and answering 0:01:37.592,0:01:39.533 fascinating questions[br]about our economy, 0:01:39.533,0:01:43.006 starting with her dissertation[br]as a graduate student at MIT. 0:01:43.714,0:01:45.384 There, she changed[br]our understanding 0:01:45.384,0:01:48.113 of how the economy[br]has grown over time. 0:01:49.515,0:01:52.231 - [Christina] I think the questions[br]that came to me 0:01:52.231,0:01:55.352 were about monetary policy[br]and business cycles 0:01:55.352,0:01:56.793 and the Great Depression. 0:01:58.140,0:02:00.519 - [Narrator] It was widely believed[br]that government policies 0:02:00.519,0:02:03.015 led to less fluctuations[br]in unemployment 0:02:03.015,0:02:04.546 after World War II. 0:02:05.018,0:02:08.165 However, the data before[br]World War II was unreliable. 0:02:08.993,0:02:11.317 - [Nancy] But Christy came up[br]with the ingenious insight -- 0:02:11.317,0:02:14.801 that while you couldn't clean up[br]the historical data, 0:02:14.801,0:02:17.089 you could fuzzy up[br]the more modern data, 0:02:17.089,0:02:18.591 and that's exactly what she did. 0:02:18.591,0:02:20.393 And when she did it, lo and behold, 0:02:20.393,0:02:23.329 all these differences[br]basically collapsed. 0:02:24.099,0:02:25.739 - [Narrator] Amazingly,[br]if she applied 0:02:25.739,0:02:28.373 the old techniques to the new data, 0:02:28.373,0:02:30.042 the post-World War II economy 0:02:30.042,0:02:33.629 looked just as volatile[br]as the pre-World War II economy. 0:02:34.266,0:02:35.951 This contradicted the consensus 0:02:35.951,0:02:38.736 on the role of government[br]stabilization policies. 0:02:39.557,0:02:42.880 Her research rattled[br]the economic community. 0:02:42.880,0:02:44.347 - [David] It made a splash. 0:02:44.347,0:02:47.386 I remember one of the prominent[br]economists at MIT -- 0:02:47.386,0:02:48.772 his first reaction was, 0:02:48.772,0:02:51.556 "Well, I'd be very upset[br]about this if I believed it. 0:02:51.556,0:02:53.264 So I'm not going to believe it." 0:02:53.906,0:02:55.634 - [Narrator] Throughout[br]her academic career, 0:02:55.634,0:02:57.347 Christina continued to challenge 0:02:57.347,0:02:59.736 our understanding[br]of the Great Depression. 0:03:00.674,0:03:03.779 As just one example,[br]most economists believed 0:03:03.779,0:03:05.296 the Great Depression ended 0:03:05.296,0:03:07.084 because of higher[br]government spending 0:03:07.084,0:03:09.170 and investment in public works. 0:03:10.623,0:03:13.095 She showed that the impact[br]of those policies 0:03:13.095,0:03:14.893 were relatively small compared 0:03:14.893,0:03:17.938 to the monetary policy[br]changes taking place. 0:03:18.603,0:03:20.431 - [David] Starting[br]as soon as Roosevelt 0:03:20.431,0:03:22.259 took the U.S. off the gold standard 0:03:22.259,0:03:24.512 when he took office in 1933, 0:03:24.512,0:03:25.909 over the next decade, 0:03:25.909,0:03:28.836 there's just an enormous increase[br]in the money supply. 0:03:28.836,0:03:30.256 What she showed was that 0:03:30.256,0:03:33.779 that is what caused[br]the very rapid growth that we had. 0:03:34.145,0:03:37.091 - [Narrator] Christina's research[br]has often focused on the effect 0:03:37.091,0:03:40.295 economic events have[br]on people's everyday lives. 0:03:41.023,0:03:42.509 - [James] It's tough[br]to manage to have 0:03:42.509,0:03:44.588 new ideas on the same thing 0:03:44.588,0:03:46.065 again and again and again. 0:03:46.065,0:03:47.186 One of the remarkable things 0:03:47.186,0:03:49.159 about Christy and David's[br]research program is 0:03:49.159,0:03:51.245 that they have done that[br]very successfully. 0:03:51.707,0:03:53.250 - [Narrator] Over 35 years, 0:03:53.250,0:03:55.712 Christina has done[br]meticulous research, 0:03:55.712,0:03:59.392 frequently, with her collaborator[br]and husband, David Romer. 0:03:59.881,0:04:02.291 - [David] We'll have a paper,[br]and I think it's almost done. 0:04:02.291,0:04:04.684 We've worked really hard on it, 0:04:04.684,0:04:07.266 and each do one last read. 0:04:07.266,0:04:10.871 She says, "You know,[br]I think there's a logical tension 0:04:10.871,0:04:13.977 between where we end up[br]in Section 4b 0:04:13.977,0:04:15.888 and how we set out[br]what we're going to do 0:04:15.888,0:04:18.053 in Section 2a." 0:04:18.053,0:04:20.939 And I'm thinking, "Oh,[br]no one's going to notice." 0:04:20.939,0:04:26.196 And we spend weeks more[br]on the paper because she's right. 0:04:26.196,0:04:28.792 And the paper gets much better. 0:04:28.792,0:04:31.498 - [James] One of the remarkable[br]things about her work 0:04:31.498,0:04:36.330 is the coherence that spans[br]literally her graduate school days 0:04:36.330,0:04:38.099 and her work on her dissertation, 0:04:38.099,0:04:40.186 and connects up to some[br]of her most recent work 0:04:40.186,0:04:41.722 on thinking about[br]ways of identifying 0:04:41.722,0:04:43.383 turning points in the economy. 0:04:45.821,0:04:47.940 - [Narrator] Christina's work[br]would be put to the test 0:04:47.940,0:04:50.913 during the devasting crash of 2008, 0:04:51.758,0:04:54.393 when the U.S. economy[br]was in free fall. 0:04:54.393,0:04:56.201 - [Christina] We often[br]described the economy 0:04:56.201,0:04:58.850 as if we were[br]at the edge of a cliff. 0:04:58.850,0:05:01.590 Well, the truth is, we were[br]not only at the edge of the cliff, 0:05:01.590,0:05:03.032 we were headed down. 0:05:03.032,0:05:05.568 - [Narrator] Financial markets[br]were plunging, 0:05:05.568,0:05:08.891 and the risk of contagion[br]from the U.S. to the global economy 0:05:08.891,0:05:10.468 was very real. 0:05:10.468,0:05:12.412 - [James] Even people[br]who'd seen a lot 0:05:12.412,0:05:14.833 were really worried[br]about what was happening. 0:05:14.833,0:05:16.518 - [Narrator] Just as[br]the nation was turning 0:05:16.518,0:05:20.356 to President-elect Obama[br]to confront the economic crisis, 0:05:20.356,0:05:23.623 a mysterious email[br]showed up in Christina's inbox 0:05:23.623,0:05:26.496 with the subject line:[br]"Obama Transition." 0:05:26.496,0:05:28.732 - [David] And I will take[br]a little bit of credit here 0:05:28.732,0:05:31.404 because Christina[br]was just about to delete it, 0:05:31.404,0:05:34.140 and I said, "Why don't you[br]at least google the person?" 0:05:34.140,0:05:35.883 And she discovered[br]that he was the head 0:05:35.883,0:05:38.553 of the economic side[br]of the transition. 0:05:38.553,0:05:41.408 - [Narrator] The Obama administration[br]wanted to meet with Christina 0:05:41.408,0:05:42.909 as soon as possible. 0:05:42.909,0:05:45.599 - [David] On the next day,[br]she was on a plane to Chicago 0:05:45.599,0:05:47.390 to meet with the President-elect. 0:05:47.390,0:05:49.092 - [Narrator] Christina[br]was asked to chair 0:05:49.092,0:05:51.757 the Council of Economic Advisers. 0:05:51.757,0:05:53.689 The council was set up[br]to bring academics 0:05:53.689,0:05:55.698 into the policy-making process 0:05:55.698,0:05:58.067 and make recommendations[br]to the President. 0:05:58.067,0:06:00.375 - [Christina] I was talking[br]to Rahm Emanuel, and I said, 0:06:00.375,0:06:02.677 "So tell me again,[br]how did I get this job?" 0:06:02.677,0:06:05.548 And he said, "You were an expert[br]on the Great Depression, 0:06:05.548,0:06:07.605 and we thought we might need one." 0:06:08.518,0:06:13.210 - [Janet] She's tried to understand[br]what caused the Depression, 0:06:13.210,0:06:14.970 what ended the Depression, 0:06:14.970,0:06:18.735 what role monitoring[br]and fiscal policy could play, 0:06:18.735,0:06:21.922 and no one could have been[br]better positioned to know 0:06:21.922,0:06:24.245 what the right strategy would be. 0:06:24.245,0:06:26.931 - [Christina][br]We were talking to bankers, 0:06:26.931,0:06:28.835 we were talking to employers, 0:06:28.835,0:06:31.406 we were talking to the people 0:06:31.406,0:06:33.809 that where collecting[br]the statistics. 0:06:33.809,0:06:36.181 - [Narrator] Christina's research[br]revealed that the economy 0:06:36.181,0:06:38.434 was in even more[br]of a perilous position 0:06:38.434,0:06:40.336 than previously thought. 0:06:40.336,0:06:43.439 She got on the phone with Obama[br]to give him the bad news. 0:06:44.214,0:06:45.875 - [Christina] Saying,[br]"This is terrible. 0:06:45.875,0:06:47.883 We've lost three-quarters[br]of a million jobs." 0:06:47.883,0:06:50.804 I'm just going on like this,[br]and, finally, he stops me, 0:06:50.804,0:06:54.925 and he said, "Christy,[br]it's not your fault... yet." 0:06:57.065,0:07:00.102 - [James] The challenge that Christy[br]and her other team members 0:07:00.102,0:07:02.606 on the Economic[br]Advisory Team confronted 0:07:02.606,0:07:06.496 was how large a stimulus[br]the U.S. economy needed 0:07:06.496,0:07:08.423 in order to right the ship, 0:07:08.423,0:07:10.102 and trying to calibrate that 0:07:10.102,0:07:12.406 depended critically[br]on the estimates 0:07:12.406,0:07:14.843 of how much bang[br]for the buck you get 0:07:14.843,0:07:18.182 when you use[br]fiscal policy as a tool 0:07:18.182,0:07:20.286 and try to then[br]reflate the economy. 0:07:20.286,0:07:22.753 - [Narrator] Christina[br]helped design a fiscal package 0:07:22.753,0:07:26.136 that she thought was necessary[br]to get the economy moving. 0:07:26.136,0:07:28.231 - [Gabriel] The American Recovery[br]and Reinvestment Act 0:07:28.231,0:07:29.395 was a piece of legislation 0:07:29.395,0:07:32.219 that was signed[br]in February of 2009, 0:07:32.219,0:07:35.626 and it was a combination[br]of direct government spending -- 0:07:35.626,0:07:37.495 so think of repairing highways, 0:07:37.495,0:07:40.298 transfers to State governments, 0:07:40.298,0:07:43.139 transfers to individuals,[br]and tax cuts. 0:07:43.621,0:07:46.526 And the rationale for it[br]was that at a time 0:07:46.526,0:07:48.395 when households were spending less 0:07:48.395,0:07:50.149 and businesses[br]were spending less -- 0:07:50.149,0:07:51.591 that's a time when it's appropriate 0:07:51.591,0:07:53.120 for government[br]to spend a little more 0:07:53.120,0:07:54.989 to fill in that gap. 0:07:56.638,0:07:58.600 The recessions leave long scars, 0:07:58.600,0:08:00.899 and people who lose[br]their jobs during recessions 0:08:00.899,0:08:02.611 and they're unemployed[br]for a while -- 0:08:02.611,0:08:05.479 even ten years later,[br]often are earning less 0:08:05.479,0:08:08.018 than they were[br]before the recession occurred. 0:08:08.018,0:08:09.873 So by making the case, 0:08:09.873,0:08:13.318 both in academic research[br]and then as a policymaker, 0:08:13.785,0:08:16.651 then the government could do more[br]to mitigate recessions -- 0:08:16.651,0:08:18.144 that really has an impact. 0:08:18.612,0:08:20.573 - [David] Probably hundreds[br]of thousands of people 0:08:20.573,0:08:23.364 kept their jobs[br]during the Great Recession 0:08:23.364,0:08:28.042 because she had become an expert[br]on the behavior of the economy, 0:08:28.042,0:08:30.278 on the effects of fiscal policy. 0:08:31.598,0:08:34.435 - [Janet] And she was[br]really passionate 0:08:34.435,0:08:36.507 about the role that she played 0:08:36.507,0:08:40.412 after the financial crisis[br]in the Great Recession, 0:08:40.412,0:08:44.067 and fought passionately[br]for policies 0:08:44.067,0:08:47.390 that would address[br]the 9 million people 0:08:47.390,0:08:48.526 who lost their jobs 0:08:48.526,0:08:50.618 and get the economy moving. 0:08:50.618,0:08:53.529 - [James] Christy was a very[br]fortunate person to have in that role 0:08:53.529,0:08:56.071 because much of her work,[br]academically, 0:08:56.071,0:08:58.282 over the 25 years before that, 0:08:58.282,0:09:00.413 had been focused[br]on trying to understand 0:09:00.413,0:09:02.348 the nature of the linkages 0:09:02.348,0:09:05.277 between fiscal policy,[br]monetary policy, 0:09:05.277,0:09:06.557 and economic outcomes. 0:09:06.557,0:09:07.857 - [David] That's an unusual case. 0:09:07.857,0:09:10.027 We can really see[br]a pretty direct connection 0:09:10.027,0:09:16.469 between ivory tower research[br]and real lives on a big scale. 0:09:16.469,0:09:17.954 - [Narrator] Romer's work at Berkeley 0:09:17.954,0:09:20.645 continues to ask and answer[br]these important questions 0:09:20.645,0:09:22.314 about the macroeconomy. 0:09:22.314,0:09:25.903 - [Christina] If you think about[br]what matters to a typical person: 0:09:25.903,0:09:29.392 Do they have a job?[br]Can they support their family? 0:09:29.392,0:09:32.445 Can they give[br]their children a better life 0:09:32.445,0:09:33.822 than they themselves had? -- 0:09:33.822,0:09:38.624 you realize that economic issues,[br]how well the economy operates 0:09:38.624,0:09:42.691 is probably one of the things[br]that affects people's lives 0:09:42.691,0:09:44.283 more than anything else. 0:09:44.850,0:09:46.729 ♪ [music] ♪ 0:09:46.729,0:09:49.775 - [Narrator] Want to better understand[br]Romer and business cycles? 0:09:49.775,0:09:53.128 Click here for related materials[br]and practice questions, 0:09:53.128,0:09:54.600 or check out other videos 0:09:54.600,0:09:57.500 on how economists[br]are tackling all sorts of issues -- 0:09:57.500,0:10:00.483 ranging from weighty topics,[br]such as the macroeconomy, 0:10:00.483,0:10:03.213 to everyday items,[br]like Wikipedia and wine -- 0:10:03.213,0:10:04.602 yes, even wine.