The Nobel Prize in Economics was jointly awarded on Monday to Americans William Nordhaus and Paul Romer for integrating climate change and technological innovation into the macroeconomic analysis, the Royal Swedish Academy of Sciences announced. “Their findings have significantly broadened the scope of economic analysis by constructing models that explain how the market economy interacts with nature and knowledge,” the academy said in a statement.
Nordhaus, a professor at Yale University, and Romer of New York University’s Stern School of Business have addressed “some of our time’s most basic and pressing questions about how we create long-term sustained and sustainable growth,” the academy said.
The academy further said Nordhaus in the 1990s became the first person to create a model that “describes the global interplay between the economy and the climate”. The model showed that “the most efficient remedy for problems caused by greenhouse gases is a global scheme of universally imposed carbon taxes”.
On the other hand, Romer, 62, has shown how economic forces govern the willingness of firms to produce new ideas and innovations, laying the foundations for a new model for development, known as endogenous growth theory.