Depression scholar has a reputation for pragmatism

CHRISTINA D. ROMER

In tapping academic economist Christina D. Romer to lead his Council of Economic Advisers, President-elect Barack Obama has turned to one of the preeminent scholars of the Great Depression, who colleagues say is likely to push for aggressive government intervention to ease the economic crisis.

Romer, who has taught economics at the University of California, Berkeley for 20 years, is a highly regarded economic historian with a reputation for pragmatism and center-left policy views. The choice reflects both Obama's desire for moderate voices in his inner circle and his apparent belief that the past holds insight into how to solve the problems of today.

"The fact that she's done fundamental work on US economy in the 1930s I think is solid qualification, and a really good signal from the point of view of putting the economic team together," said Barry Eichengreen, who has taught with Romer at Berkeley for 20 years. "I feel comfortable knowing that Christina's going to be there."

Romer, who is 49, received her PhD from MIT in 1985. Earlier this year she and her husband, fellow Berkeley economist David Romer, were in line for tenured positions at Harvard University, until Harvard president Drew Gilpin Faust unexpectedly rejected her bid without explanation.

Obama, in announcing Romer's appointment yesterday, made a point of noting her expertise, specifically in how the United States emerged from the Depression.

"Christina has done ground-breaking research on many of the topics our administration will confront, from tax policy to fighting recessions," Obama said. "And her clear-eyed, independent analyses have received praise from both conservative and liberal thinkers alike."

Indeed, colleagues say that Romer, despite liberal-leaning economic views, is not doctrinaire, and that she has shown flexibility in thinking and a willingness to follow data wherever they lead. In a Bloomberg column this fall, Kevin A. Hassett, an economic specialist at the conservative American Enterprise Institute and a former adviser to Republican presidential candidate John McCain, listed Romer as one of a few economists he wished were leading the country's economic policy.

"She also has an incredible ability to take complex ideas and make them simple," said Chang-Tai Hsieh, an economics professor at the University of Chicago who has worked with her.

Romer's work has focused on US economic policy as an instrument for sustaining and spurring the economy. One of her studies looked at whether the economy had become less volatile in the postwar era, which some specialists contended. Romer's analysis suggested that wasn't necessarily the case.

In 2006, she wrote an article with Hsieh for the Journal of Economic History arguing that the US government's inadequate response during the Depression was a "policy mistake of monumental proportions."

The lesson she drew from that crisis, according to colleagues and a review of her writings, is that strong government intervention is sometimes necessary medicine. That may mean she will urge Obama to act aggressively to keep capital flowing through the financial system and to enact an economic stimulus package that injects government spending into the economy at the risk of ballooning the deficit.

"She'll be weighing in on the side of a large stimulus," said J. Bradford DeLong, a fellow Berkeley economist.

DeLong was among the economists at both Harvard and Berkeley who were critical of Faust's decision not to grant Romer a tenured position at Harvard. The Harvard Crimson reported in May that Harvard's economics department had approved the job offer, but that Faust had vetoed it and declined to explain her decision.

Romer was quoted last year saying that recessions, because they're often sparked by shocks to financial systems, are difficult to forecast. In a 1999 article in the Journal of Economic Perspectives, she fretted that the more volatile economies of the past could return without sound government leadership.

"What is clear is that, replace that steady hand with an unsteady one, and the old economy could reemerge in a flash."

N. Gregory Mankiw, a Harvard University economist and former chairman of President Bush's Council of Economic Advisers, noted that with Romer joining Obama's administration, two of the nation's leading Great Depression specialists - Federal Reserve Chairman Ben Bernanke is also a scholar of the era - will be working together to prevent history from repeating itself.

"It's kind of fascinating that they're both down there dealing with what's the most serious financial situation since the Great Depression," said Mankiw, who was the best man at Romer's wedding. "Let's hope all those years of study have done them some good."

Scott Helman can be reached at shelman@globe.com.