Obama Appoints Berkeley Prof Christina Romer to Chair Council of Economic Advisers

Christina Romer, of UC Berkeley, has been appointed to Chair President Elect Obama's Council of Economic Advisers. Romer wrote, if not the book, at least the chapter for Encyclopedia Britannica, The Great Depression.  News of her appointment should make liberals and women who opposed the appointment of Lawrence Summers, who many predicted (including today's Wall Street Journal) would get this job, somewhat happy, though it looks like Summers will be named White House economic director.

Professor Romer and her husband David were both advisers to the Obama campaign and they  hold two seats on the committee which decides when the U.S is officially in a recession.

The Romers are macroeconomists, who study the big picture in economics. They've also studied the way tax cuts affect the economy and government spending. A UC Berkeley article reported,

What they found about both issues surprised them. Tax cuts provide powerful short-run stimulus to the economy, but there is little evidence that tax cuts restrain government spending.

"It turns out," Christina explains, "that tax cuts have led, eventually, to tax increases. Basically, something has to give. What we thought gave when you cut taxes was spending, but we seem to find that in postwar U.S. history what actually gives is the tax cut itself. A substantial fraction of a tax cut is typically undone in the subsequent five years."