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- [Christina] The most important thing
that I try to pass on

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is the sense that economics
is an empirical field,

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and if you get
new empirical evidence,

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you're going to have
to change the way

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you think about the economy.

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I think being open to that

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is the most important thing
for a young economist to know.

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♪ [music] ♪

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- [Narrator] Economists --
not a group with a lot of Marys,

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Natashas or Juanitas,

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and that's caused
a lot of controversy.

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However, what's often overlooked
are the actual female economists

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who are pushing economics forward
by addressing real-world issues.

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Welcome to Women in Economics.

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- [Christina] I grew up in a family

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where public policy
was discussed a lot.

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I was planning to be a lawyer,

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so I was going to major
in Government.

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And as part of the Government
major at my college,

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you had to take
a year of Economics.

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I was about three weeks in,
and I was hooked,

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like the Government major's gone,
the lawyer's gone --

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I was an economist.

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- [Narrator] Christina Romer
is a macroeconomic historian.

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She takes the tools
of modern economics,

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statistics and data

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and applies them
to historical questions.

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- [James] Christy's research
agenda throughout her career

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has focused
on a core set of topics

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about economic fluctuations
and business cycles.

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- [Narrator] She's been asking
and answering

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fascinating questions
about our economy,

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starting with her dissertation
as a graduate student at MIT.

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There, she changed
our understanding

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of how the economy
has grown over time.

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- [Christina] I think the questions
that came to me

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were about monetary policy
and business cycles

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and the Great Depression.

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- [Narrator] It was widely believed
that government policies

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led to less fluctuations
in unemployment

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after World War II.

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However, the data before
World War II was unreliable.

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- [Nancy] But Christy came up
with the ingenious insight --

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that while you couldn't clean up
the historical data,

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you could fuzzy up
the more modern data,

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and that's exactly what she did.

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And when she did it, lo and behold,

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all these differences
basically collapsed.

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- [Narrator] Amazingly,
if she applied

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the old techniques to the new data,

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the post-World War II economy

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looked just as volatile
as the pre-World War II economy.

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This contradicted the consensus

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on the role of government
stabilization policies.

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Her research rattled
the economic community.

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- [David] It made a splash.

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I remember one of the prominent
economists at MIT --

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his first reaction was,

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"Well, I'd be very upset
about this if I believed it.

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So I'm not going to believe it."

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- [Narrator] Throughout
her academic career,

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Christina continued to challenge

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our understanding
of the Great Depression.

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As just one example,
most economists believed

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the Great Depression ended

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because of higher
government spending

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and investment in public works.

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She showed that the impact
of those policies

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were relatively small compared

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to the monetary policy
changes taking place.

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- [David] Starting
as soon as Roosevelt

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took the U.S. off the gold standard

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when he took office in 1933,

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over the next decade,

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there's just an enormous increase
in the money supply.

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What she showed was that

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that is what caused
the very rapid growth that we had.

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- [Narrator] Christina's research
has often focused on the effect

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economic events have
on people's everyday lives.

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- [James] It's tough
to manage to have

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new ideas on the same thing

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again and again and again.

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One of the remarkable things

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about Christy and David's
research program is

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that they have done that
very successfully.

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- [Narrator] Over 35 years,

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Christina has done
meticulous research,

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frequently, with her collaborator
and husband, David Romer.

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- [David] We'll have a paper,
and I think it's almost done.

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We've worked really hard on it,

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and each do one last read.

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She says, "You know,
I think there's a logical tension

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between where we end up
in Section 4b

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and how we set out
what we're going to do

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in Section 2a."

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And I'm thinking, "Oh,
no one's going to notice."

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And we spend weeks more
on the paper because she's right.

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And the paper gets much better.

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- [James] One of the remarkable
things about her work

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is the coherence that spans
literally her graduate school days

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and her work on her dissertation,

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and connects up to some
of her most recent work

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on thinking about
ways of identifying

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turning points in the economy.

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- [Narrator] Christina's work
would be put to the test

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during the devasting crash of 2008,

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when the U.S. economy
was in free fall.

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- [Christina] We often
described the economy

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as if we were
at the edge of a cliff.

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Well, the truth is, we were
not only at the edge of the cliff,

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we were headed down.

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- [Narrator] Financial markets
were plunging,

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and the risk of contagion
from the U.S. to the global economy

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was very real.

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- [James] Even people
who'd seen a lot

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were really worried
about what was happening.

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- [Narrator] Just as
the nation was turning

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to President-elect Obama
to confront the economic crisis,

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a mysterious email
showed up in Christina's inbox

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with the subject line:
"Obama Transition."

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- [David] And I will take
a little bit of credit here

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because Christina
was just about to delete it,

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and I said, "Why don't you
at least google the person?"

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And she discovered
that he was the head

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of the economic side
of the transition.

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- [Narrator] The Obama administration
wanted to meet with Christina

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as soon as possible.

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- [David] On the next day,
she was on a plane to Chicago

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to meet with the President-elect.

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- [Narrator] Christina
was asked to chair

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the Council of Economic Advisers.

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The council was set up
to bring academics

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into the policy-making process

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and make recommendations
to the President.

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- [Christina] I was talking
to Rahm Emanuel, and I said,

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"So tell me again,
how did I get this job?"

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And he said, "You were an expert
on the Great Depression,

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and we thought we might need one."

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- [Janet] She's tried to understand
what caused the Depression,

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what ended the Depression,

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what role monitoring
and fiscal policy could play,

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and no one could have been
better positioned to know

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what the right strategy would be.

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- [Christina]
We were talking to bankers,

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we were talking to employers,

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we were talking to the people

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that where collecting
the statistics.

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- [Narrator] Christina's research
revealed that the economy

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was in even more
of a perilous position

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than previously thought.

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She got on the phone with Obama
to give him the bad news.

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- [Christina] Saying,
"This is terrible.

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We've lost three-quarters
of a million jobs."

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I'm just going on like this,
and, finally, he stops me,

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and he said, "Christy,
it's not your fault... yet."

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- [James] The challenge that Christy
and her other team members

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on the Economic
Advisory Team confronted

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was how large a stimulus
the U.S. economy needed

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in order to right the ship,

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and trying to calibrate that

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depended critically
on the estimates

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of how much bang
for the buck you get

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when you use
fiscal policy as a tool

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and try to then
reflate the economy.

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- [Narrator] Christina
helped design a fiscal package

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that she thought was necessary
to get the economy moving.

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- [Gabriel] The American Recovery
and Reinvestment Act

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was a piece of legislation

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that was signed
in February of 2009,

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and it was a combination
of direct government spending --

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so think of repairing highways,

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transfers to State governments,

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transfers to individuals,
and tax cuts.

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And the rationale for it
was that at a time

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when households were spending less

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and businesses
were spending less --

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that's a time when it's appropriate

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for government
to spend a little more

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to fill in that gap.

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The recessions leave long scars,

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and people who lose
their jobs during recessions

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and they're unemployed
for a while --

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even ten years later,
often are earning less

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than they were
before the recession occurred.

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So by making the case,

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both in academic research
and then as a policymaker,

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then the government could do more
to mitigate recessions --

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that really has an impact.

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- [David] Probably hundreds
of thousands of people

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kept their jobs
during the Great Recession

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because she had become an expert
on the behavior of the economy,

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on the effects of fiscal policy.

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- [Janet] And she was
really passionate

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about the role that she played

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after the financial crisis
in the Great Recession,

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and fought passionately
for policies

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that would address
the 9 million people

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who lost their jobs

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and get the economy moving.

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- [James] Christy was a very
fortunate person to have in that role

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because much of her work,
academically,

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over the 25 years before that,

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had been focused
on trying to understand

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the nature of the linkages

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between fiscal policy,
monetary policy,

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and economic outcomes.

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- [David] That's an unusual case.

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We can really see
a pretty direct connection

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between ivory tower research
and real lives on a big scale.

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- [Narrator] Romer's work at Berkeley

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continues to ask and answer
these important questions

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about the macroeconomy.

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- [Christina] If you think about
what matters to a typical person:

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Do they have a job?
Can they support their family?

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Can they give
their children a better life

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than they themselves had? --

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you realize that economic issues,
how well the economy operates

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is probably one of the things
that affects people's lives

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more than anything else.

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♪ [music] ♪

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- [Narrator] Want to better understand
Romer and business cycles?

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Click here for related materials
and practice questions,

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00:09:53,128 --> 00:09:54,600
or check out other videos

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on how economists
are tackling all sorts of issues --

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ranging from weighty topics,
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to everyday items,
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00:10:03,213 --> 00:10:04,602
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