Paul Romer

Romer's research on economic growth followed extensive studies of long-run growth during the 1950s and 1960s.[16] The Solow–Swan model, for example, established the primacy of technological progress in accounting for sustained increases in output per worker. His 1983 dissertation, supervised by José Scheinkman and Robert Lucas Jr., showed mathematical models of economies in which technological change resulted from intentional actions of people, such as research and development. It led to two Journal of Political Economy articles published in 1986 and 1990, which started endogenous growth theory.

Romer taught at the University of Rochester, the University of Chicago, the University of California, Berkeley, Stanford University and New York University. At New York University, he founded the Marron Institute of Urban Management. Its objective is to assist cities in planning its future developments, specifically improving the safety, health, and mobility of citizens.[5]

Romer temporarily left academia in 2001 to found Aplia, a company which produces online problem sets for college students. Students have submitted upwards of 2.4 billion answers to homework problems on the Aplia website. Aplia was purchased in 2007 by Cengage Learning.

He is credited with the quote "A crisis is a terrible thing to waste," which he said during a November 2004 venture-capitalist meeting in California. Although he was referring to the rapidly rising education levels in other countries compared to the United States, the quote became a rallying concept for economists and consultants looking for constructive opportunities amid the Great Recession.[17]

Romer has attempted to replicate the success of charter cities and make them an engine of economic growth in developing countries. He promoted this idea in a TED talk in 2009,[18] and he has argued that with better rules and institutions less developed nations can be set on a different and better trajectory for growth.[19] In his model, a host country would turn responsibility for a charter city over to a more developed trustee nation, which would allow for new rules of governance to emerge. People could "vote with their feet" for or against these rules.[10]

The government of Honduras considered creating charter cities, though without the oversight of a third-party government, which some argue is neo-colonialism.[10] Romer served as chair of a "transparency committee" but resigned in September 2012 when the Honduran government agency responsible for the project signed agreements with international developers without involvement of the committee.[20]

He became World Bank Chief Economist in October 2016. He resigned on 24 January 2018,[7][8] following a controversy in which he stated in an interview with The Wall Street Journal on January 12,[21][8] that during the tenure of Chile's socialist President Michelle Bachelet from 2014 onwards, Chile's ranking for ease of doing business had been downgraded by the World Bank as a result of changes of methodology which he claimed may have been politically motivated,[8] a claim denied by the former World Bank economist responsible for compiling Chile's ranking, Chilean economist Augusto Lopez-Claros.[22][23]

Paul Romer during Nobel press conference in Stockholm, December 2018

Romer shared the 2018 Prize with William Nordhaus.[24] In choosing Romer as one of the 2018 economics laureates, the Royal Swedish Academy of Sciences stated that he had shown "how knowledge can function as a driver of long-term economic growth. . . . [Prior macroeconomic studies] had not modelled how economic decisions and market conditions determine the creation of new technologies. Paul Romer solved this problem by demonstrating how economic forces govern the willingness of firms to produce new ideas and innovations."[3]

After receiving the prize, Romer described how he started thinking about the relationship between growth and innovation: "The question that I first asked was, why was progress . . . speeding up over time? It arises because of this special characteristic of an idea, which is if [a million people try] to discover something, if any one person finds it, everybody can use the idea."[25]

The same day he received the award, Romer married Caroline Weber, a professor of French Literature at Barnard College.[26]