The Nobel Prize in Economics Goes to William Nordhaus and Paul Romer!

Two excellent choices. Nordhaus for environmental economics and Paul Romer for economic growth. I did a video for MRUniversity that goes over Paul Romer’s contributions including not only economic growth and charter cities but also his entrepreneurship in developing tools to teach economics! The video was done when MRUniversity was in the early years so it doesn’t have a lot of bells and whistles. On the other hand, Romer told me he really liked this video so this year I don’t think I need to write more!

See Tyler’s posts for more on Nordhaus and also on Romer.

Comments

Romer's theory predicts faster growth in developed countries and slower growth in less-developed countries while the Solow model predicts the opposite. If Romer misses the target on such a huge, observable fact, maybe it's little more than an impressive mathematical exercise.

@Brian-but that describes Africa perfectly. The other growth in Asia you can argue is nothing more than USA / EU outsourcing. So Romer's model stands.

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Your comment makes me think you didn't listen to Tabarrok's video. Alex, this is a good video. Useful. Thanks.

Mrs. Romer is very pleased to hear this news... along with the $1+M prize.

From memory, I believe what Dr. Romer did was introduce the fudge factor of "technology change" from exogenous, as in the Solow equation for growth, to endogenous, which sounds more realistic to me. Whether or not this warrants a Nobel Prize I'll leave up to the Nobel committee.

Bonus trivia: Nobel was a dynamite inventor but he had a severe personality defect, worse than even some people who post here, and thought his life completely useless, though he found a way of stabilizing nitroglycerin in a matrix to make safe industrial explosives. Unless he was just faking it, which some say he was, but I don't think so.

THe article from Nordhaus & Tobin from 1972 "Is growth obsolete?" is quite interesting.

The section "growth and natural resources" is pretty much the discussion around pollution and growth we have these days.

I don't know if Nordhaus is a pioneer in the coupling of economic growth and pollution, if he is.....this is important because Malthus and other grumpy old men focused on population, not the effect of population on natural resources.

Really nice video. Brings me back to my first econ classes- I remember the Solow model being dropped on us ex machina. Didn't exactly bother me, being such an amenable student, but I sure didn't why we were studying It. Appreciate getting some of the background on that and how Romer pushed it all forward!

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