Christina Romer may not be a big name in Washington government or politics, but colleagues say she's someone you'd want around during troubled economic times.
President-elect Barack Obama apparently agrees. On Monday, he named the 49-year-old UC Berkeley economist to head his Council of Economic Advisers.
"If there was ever any time for such a person, now is the time," said Aaron Edlin, a UC Berkeley professor of economics and law who has known Romer since she taught at Princeton in the 1980s.
Romer is regarded as an expert on the causes of recessions. She is described by colleagues as a good communicator and someone who can guide the White House on complex economic issues. She's skeptical of supply-side economics and has criticized the reliance on long-term deficits in less troubled times to shrink unemployment and pump up the economy.
Romer literally has an encyclopedic knowledge of the history of economic policy — she wrote the Encyclopaedia Britannica's entry on the Great Depression. She also has a knack for writing clearly about economics, ever one of academia's more abstruse subjects.
"It's a wonderful, superb, excellent choice," said economics professor J. Bradford DeLong, another of Romer's UC Berkeley colleagues. "Her depth of knowledge about the Great Depression will insure that if a mistake was made in the Great Depression, it won't be made by the Obama administration."
Romer's colleagues said her communication
"She's very levelheaded and a great communicator, and that makes her very well suited for this job," Edlin said.
Romer is co-director of the Program in Monetary Economics at the National Bureau of Economic Research, and has been a full professor at UC Berkeley since 1993. She joined the faculty in 1988, after teaching at Princeton from 1985 to 1988. She received her doctorate in economics in 1985 from the Massachusetts Institute of Technology.
Romer's husband, David Romer, is also a UC Berkeley economics professor.
Romer can be expected to bless short-term deficit spending as a necessary response to the current fiscal and economic crisis. But she has argued that persistent deficits sap long-run U.S. economic growth and are ignored by a policy-making consensus that believes they are not particularly important.
Most economists think deficits matter, and the mystery is "why policymakers haven't learned and ideas haven't changed" since the 1960s and 1970s, when policymakers thought deficits could be ignored, she wrote in a paper last year.
Romer said the indifference to budget balancing and tolerance of long-term deficits is a legacy of the 1960s and 1970s, in which running deficits was seen as a largely self-correcting way of reducing unemployment.
Another idea she rejects is the notion that deficits will take care of themselves, as they are offset by increases in economic output.
Romer and her husband also question several conservative ideas about the salutary effects of tax cuts.
One such idea is the supply-side theory that tax cuts increase economic output over the long term. The Romers' research disputes that theory, saying the uptick is short-lived. In addition, they argue, the cuts increase inflation because they expand the demand for goods and services without increasing the productive capacity to meet that demand, leading prices to go up.
The Romers also have argued that so-called "starve the beast" attempts to reduce the size of government by reducing revenue have been unsuccessful. Instead, long-term tax cuts have actually ended up increasing federal spending, they say.
In addition, tax cuts are typically followed a few years later by legislated tax increases, they report.
Despite her criticism of some conservative economic ideas, she is a centrist and a moderate whose research "is respected by all sorts of economists," Edlin said.
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