WEBVTT 00:00:00.382 --> 00:00:02.999 - [Christina] The most important thing that I try to pass on 00:00:02.999 --> 00:00:06.192 is the sense that economics is an empirical field, 00:00:06.192 --> 00:00:08.580 and if you get new empirical evidence, 00:00:08.580 --> 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 --> 00:00:18.023 is the most important thing for a young economist to know. 00:00:18.023 --> 00:00:19.583 ♪ [music] ♪ 00:00:19.583 --> 00:00:22.677 - [Narrator] Economists -- not a group with a lot of Marys, 00:00:22.677 --> 00:00:24.782 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 --> 00:00:34.982 who are pushing economics forward by addressing real-world issues. 00:00:35.610 --> 00:00:38.118 Welcome to Women in Economics. 00:00:45.507 --> 00:00:48.007 - [Christina] I grew up in a family 00:00:48.007 --> 00:00:51.295 where public policy was discussed a lot. 00:00:52.374 --> 00:00:54.411 I was planning to be a lawyer, 00:00:55.547 --> 00:00:57.735 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 --> 00:01:03.383 you had to take a year of Economics. 00:01:04.251 --> 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 --> 00:01:12.688 I was an Economist. 00:01:14.159 --> 00:01:17.174 - [Narrator] Christina Romer is a macroeconomic 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 --> 00:01:23.886 and applies them to historical questions. 00:01:25.553 --> 00:01:28.397 - [James] Christy's researcher agenda throughout her career 00:01:28.397 --> 00:01:31.784 has focused on a course set of topics 00:01:31.784 --> 00:01:35.887 about economic fluctuations and business cycles. 00:01:35.887 --> 00:01:37.472 - [Narrator] She's been asking and answering 00:01:37.472 --> 00:01:39.533 fascinating questions about our economy, 00:01:39.533 --> 00:01:43.006 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 --> 00:01:48.113 of how the economy has grown over time. 00:01:49.515 --> 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 --> 00:01:56.793 and the Great Depression. 00:01:58.140 --> 00:02:00.519 - [Narrator] It was widely believed that government policies 00:02:00.519 --> 00:02:03.015 led to less fluctuations and unemployment 00:02:03.015 --> 00:02:04.546 after World War II. 00:02:05.018 --> 00:02:08.165 However, the data before World War II was unreliable. 00:02:08.993 --> 00:02:11.317 - [Nancy] But Christy came up with the ingenious insight -- 00:02:11.317 --> 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 --> 00:02:23.329 all these differences basically collapsed. 00:02:24.099 --> 00:02:25.739 - [Narrator] Amazingly, if she applied 00:02:25.739 --> 00:02:28.373 the old techniques to the new data, 00:02:28.373 --> 00:02:30.042 the post-World War II economy 00:02:30.042 --> 00:02:33.629 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 --> 00:02:38.736 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 --> 00:02:44.347 - [David] It made a splash. 00:02:44.347 --> 00:02:47.386 I remember one of the prominent economist MIT -- 00:02:47.386 --> 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 --> 00:02:53.264 So I'm not going to believe it." 00:02:54.026 --> 00:02:55.524 - [Narrator] Throughout her academic career, 00:02:55.524 --> 00:02:57.347 Christine continued to challenge 00:02:57.347 --> 00:02:59.736 our understanding of the Great Depression. 00:03:00.674 --> 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 --> 00:03:09.170 and investment in public works. 00:03:10.623 --> 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 --> 00:03:17.938 the monetary policy changes taking place. 00:03:18.603 --> 00:03:20.431 - [David] Starting as soon as Roosevelt 00:03:20.431 --> 00:03:22.259 took the U.S. off the gold standard 00:03:22.259 --> 00:03:24.512 when he took office in 1933, 00:03:24.512 --> 00:03:25.909 over the next decade, 00:03:25.909 --> 00:03:28.836 there's just an enormous increase in the money supply. 00:03:28.836 --> 00:03:30.256 What she showed was that 00:03:30.256 --> 00:03:33.779 that is what caused the very rapid growth that we had. 00:03:34.145 --> 00:03:37.091 - [Narrator] Christina's research has often focused on the effect 00:03:37.091 --> 00:03:40.295 economic events have on people's everyday lives. 00:03:41.023 --> 00:03:42.509 - [James] It's tough to manage to have 00:03:42.509 --> 00:03:44.588 new ideas on the same thing 00:03:44.588 --> 00:03:46.065 again and again and again. 00:03:46.065 --> 00:03:47.186 One of the remarkable things 00:03:47.186 --> 00:03:49.159 about Christy and David's research program is 00:03:49.159 --> 00:03:51.245 that they have done that very successfully. 00:03:51.707 --> 00:03:53.250 - [Narrator] Over 35 years, 00:03:53.250 --> 00:03:55.712 Christina has done meticulous research, 00:03:55.712 --> 00:03:59.392 frequently, with her collaborator and husband, David Romer. 00:03:59.881 --> 00:04:02.291 - [David] We'll have a paper, and I think it's almost done. 00:04:02.291 --> 00:04:04.684 We've worked really hard on it, 00:04:04.684 --> 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 --> 00:04:15.888 and how we set out what we're going to do 00:04:15.888 --> 00:04:18.053 in Section 2a." 00:04:18.053 --> 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 --> 00:04:28.792 And the paper gets much better. 00:04:28.792 --> 00:04:31.498 - [James] One of the remarkable things about her work 00:04:31.498 --> 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 --> 00:04:43.383 turning points in the economy. 00:04:45.821 --> 00:04:47.940 - [Narrator] Christina's work would be put to the test 00:04:47.940 --> 00:04:50.913 during the devasting crash of 2008, 00:04:51.758 --> 00:04:54.393 when the U.S. economy was in free fall. 00:04:54.393 --> 00:04:56.201 - [Christina] We often described the economy 00:04:56.201 --> 00:04:58.850 as [if we were] 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 the cliff, 00:05:01.590 --> 00:05:03.032 we were headed down. 00:05:03.032 --> 00:05:05.568 - [Narrator] Financial markets were plunging, 00:05:05.568 --> 00:05:08.891 and the risk of contagion from the U.S. to the global economy 00:05:08.891 --> 00:05:10.468 was very real. 00:05:10.468 --> 00:05:12.412 - [James] Even people who'd seen a lot 00:05:12.412 --> 00:05:14.833 were really worried about what was happening. 00:05:14.833 --> 00:05:16.518 - [Narrator] Just as the nation was turning 00:05:16.518 --> 00:05:20.356 to President-elect Obama to confront the economic crisis, 00:05:20.356 --> 00:05:23.623 a mysterious email showed up in Christina's inbox 00:05:23.623 --> 00:05:26.496 with the subject line: "Obama Transition." 00:05:26.496 --> 00:05:28.732 - [David] 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 - [Narrator] 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 - [David] On the next day, she was on a plane to Chicago 00:05:45.599 --> 00:05:47.390 to meet with the President-elect. 00:05:47.390 --> 00:05:49.092 - [Narrator] Christina was asked to chair 00:05:49.092 --> 00:05:51.757 the Council of Economic Advisers. 00:05:51.757 --> 00:05:53.689 The council was set up to bring academics 00:05:53.689 --> 00:05:55.698 into the policy-making process 00:05:55.698 --> 00:05:58.067 and make recommendations to the President. 00:05:58.067 --> 00:06:00.375 - [Christina] I was talking to Rahm Emanuel, and I said, 00:06:00.375 --> 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 --> 00:06:07.605 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 --> 00:06:14.970 what ended the Depression, 00:06:14.970 --> 00:06:18.735 what role monitoring and fiscal policy could play, 00:06:18.735 --> 00:06:21.922 and no one could have been better positioned to know 00:06:21.922 --> 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 in even more of a perilous position 00:06:38.434 --> 00:06:40.336 than previously thought. 00:06:40.336 --> 00:06:43.439 She got on the phone with Obama to give him the bad news. 00:06:44.214 --> 00:06:45.875 - [Christina] Saying, "This is terrible. 00:06:45.875 --> 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 --> 00:06:54.925 and he said, "Christy, it's not your fault... yet." 00:06:57.065 --> 00:07:00.102 - [James] The challenge that Christy and her other 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 U.S. economy needed 00:07:06.496 --> 00:07:08.423 in order to right the ship, 00:07:08.423 --> 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 reflate the economy. 00:07:20.286 --> 00:07:22.753 - [Narrator] Christina helped design a fiscal package 00:07:22.753 --> 00:07:26.266 that she thought was necessary to get the economy moving. 00:07:26.266 --> 00:07:28.103 - [Gabriel] The American Recovery and Reinvestment Act 00:07:28.103 --> 00:07:29.215 was 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 --> 00:07:37.495 so think of repairing highways, 00:07:37.495 --> 00:07:40.298 transfers to State governments, 00:07:40.298 --> 00:07:43.139 transfers to individuals, and tax cuts. 00:07:43.621 --> 00:07:46.526 And the rationale for it was that at a 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 --> 00:07:51.491 that's a time when it's appropriate 00:07:51.491 --> 00:07:53.120 for government to spend a little more 00:07:53.120 --> 00:07:54.989 to fill in that gap. 00:07:56.638 --> 00:07:58.600 The recessions leave long scars, 00:07:58.600 --> 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 --> 00:08:05.479 even ten years later, often are earning less 00:08:05.479 --> 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 --> 00:08:13.318 both in academic research and then as a policymaker, 00:08:13.785 --> 00:08:16.651 then the government could do more to mitigate recessions -- 00:08:16.651 --> 00:08:18.144 that really has an impact. 00:08:18.612 --> 00:08:20.573 - [David] Probably hundreds of thousands of people 00:08:20.573 --> 00:08:23.364 kept their jobs during the Great Recession 00:08:23.364 --> 00:08:28.042 because she had become an expert on the behavior of the economy, 00:08:28.042 --> 00:08:30.278 on the effects of fiscal policy. 00:08:31.598 --> 00:08:34.435 - [Janet] And she was really passionate 00:08:34.435 --> 00:08:36.507 about the role that she played 00:08:36.507 --> 00:08:40.412 after the financial crisis in the Great Recession, 00:08:40.412 --> 00:08:44.067 and fought 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 --> 00:08:50.618 and get the economy moving. 00:08:50.618 --> 00:08:53.529 - [James] Christy was a very fortunate person to have in that role 00:08:53.529 --> 00:08:56.071 because much of her work, academically, 00:08:56.071 --> 00:08:58.282 over the 25 years before that, 00:08:58.282 --> 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 --> 00:09:05.277 between fiscal policy, monetary policy, 00:09:05.277 --> 00:09:06.587 and economic outcomes. 00:09:06.587 --> 00:09:07.687 - [David] That's an unusual case. 00:09:07.687 --> 00:09:10.027 We can really see a pretty direct connection 00:09:10.027 --> 00:09:16.469 between ivory tower research and real lives on a big scale. 00:09:16.469 --> 00:09:17.954 - [Narrator] Romer's work at Berkeley 00:09:17.954 --> 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 --> 00:09:25.903 - [Christina] If you think about what matters to a typical person: 00:09:25.903 --> 00:09:29.392 Do they have a job? Can they support their family? 00:09:29.392 --> 00:09:32.445 Can they give their children a better life 00:09:32.445 --> 00:09:33.822 than they themselves had? -- 00:09:33.822 --> 00:09:38.624 you realize that economic issues, how well the economy operates 00:09:38.624 --> 00:09:42.691 is probably one of the things that affects people's lives 00:09:42.691 --> 00:09:44.283 more than anything else. 00:09:44.850 --> 00:09:46.729 ♪ [music] ♪ 00:09:46.729 --> 00:09:49.775 - [Narrator] Want to better understand Romer and business cycles? 00:09:49.775 --> 00:09:53.128 Click here for related materials and practice questions, 00:09:53.128 --> 00:09:54.600 or check out other videos 00:09:54.600 --> 00:09:57.500 on how economists are tackling all sorts of issues -- 00:09:57.500 --> 00:10:00.483 ranging from weighty topics, such as the macroeconomy, 00:10:00.483 --> 00:10:03.213 to everyday items, like Wikipedia and wine... 00:10:03.213 --> 00:10:05.016 yes, even wine.