Back from the Brink

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Christina D. Romer
Chair, Council of Economic Advisers

Federal Reserve Bank of Chicago
Chicago, Illinois, September 24, 2009

The anniversary of the collapse of Lehman Brothers has spurred countless speeches, newspaper articles, and conferences, such as this one. I think many have rightly felt a need to reflect on the national economic nightmare that began last September. I am certainly no exception. But, I find myself looking at the past year from two very different perspectives. One is as a policymaker focused on current economic challenges and charged with helping to shape the policy response. The other is as an economic historian with a special interest in the Great Depression.

In my talk today, I hope to blend those two perspectives. I want to reflect on what we have been through—particularly how it compares with the experience of the 1930s. I want to discuss how the shocks we have faced have been similar in the two episodes, but the policy responses have been vastly different. As a result, the economy this time did not go over the edge as it did in the 1930s. At the same time, and perhaps most importantly, I want to discuss where we go from here and the challenges that lie ahead. Eighty years later, are there still lessons to be learned from the Great Depression?

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