The laureates of the 2018 Nobel Prize in Economics
On Monday, 8 October, the 2018 Nobel Prize in Economics has been awarded to U.S. economists William Nordhaus and Paul Romer. The duo has been awarded the Nobel Prize for their research on how we create long-term sustained and sustainable growth and how we can tackle climate change, which are the most fundamental and urgent matters of this moment. More in particular, they received the prize for constructing "green growth" models that show how innovation and climate policies can be integrated with economic growth.
Paul Michael Romer (1955) is an American economist and the pioneer of endogenous growth theory. His endogenous growth theory, which demonstrated how economic forces govern the willingness of companies to produce new ideas and innovations, generated large amounts of new research into the regulations and policies that encourage new ideas and long-term prosperity. Paul Romer also encourages the use of new ideas and innovations in macroeconomic analysis. This became clear when he responded to the paper of William Buiter, "The unfortunate uselessness of most ’state of the art’ academic monetary economics" (2009). The dismal state of macroeconomics, pictured by Buiter, was targeted by Romer’s "The Trouble with Macroeconomics" (2016). In this paper, Romer argues that macroeconomics has gone backwards because of a general failure mode of science that is triggered when respect for highly regarded leaders evolves into a deference to authority that displaces objective fact from its position as the ultimate determinant of scientific truth As such, it should come as no surprise that Romer was awarded the Nobel Prize for "integrating technological innovations into long-run macroeconomic analysis".
Romer taught at many American Universities, amongst others the University of California, Berkley and the Stanford University's Graduate School of Business, and one of his textbooks, Advanced Macroeconomics, is even used at Erasmus School of Economics. Furthermore, Romer was the former World Bank chief economist until January 2018. Romer is now Professor of Economics at the Stern School of Business at New York Univeristy (NYU).
William Dawbney Nordhaus (1941) is an American economist and Sterling Professor of economics at Yale University. Nordhaus was the first person to create a quantitative model that describes the global interplay between the economy and the climate. His "integrated assessment model", which he created in 1990, combines theories and empirical results from physics, chemistry and economics. His model is now widespread and is used to examine the consequences of climate policy interventions, for example carbon taxes, and to simulate how the economy and climate can co-evolve. As such, again, it should thus come as no surprise that Nordhaus was specifically awarded the Nobel Prize for "integrating climate change into long-run macroeconomic analysis."
Nordhaus has been a member of the faculty of Yale University since 1967 and has been Full Professor of Economics since 1973 and also is Professor in Yale’s School of Forestry and Environmental Studies. Furthermore, he is a member of the National Academy of Sciences, a Fellow of the American Academy of Arts and Sciences, he is on the research staff of the National Bureau of Economic Research and has been a member and senior advisor of the Brookings Panel on Economic Activity, Washington, D.C. since 1972. From 1977 to 1979, he was a Member of the President's Council of Economic Advisers.