William D. Nordhaus, Paul M. Romer win Nobel in Economics

Stockholm, Oct 8: The Royal Swedish Academy of Sciences has decided to award the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2018 to William D. Nordhaus and Paul M. Romer.

Laureate William Nordhaus' research shows that the most effective remedy for problems caused by greenhouse gas emissions is a global scheme of carbon taxes uniformly imposed on all countries. The diagram shows CO2 emissions for four climate policies according to his simulations.

Nordhaus was the first person to create a quantitative model that describes the global interplay between the economy and the climate. His model is now widespread and is used to examine the consequences of climate policy interventions, for example carbon taxes.

Romer's research laid the foundation of what is now called endogenous growth theory. The theory has generated vast amounts of new research into the regulations and policies that encourage new ideas and long-term prosperity.

Romer's research shows how the accumulation of ideas sustains long-term economic growth. He demonstrated how economic forces govern the willingness of firms to produce new ideas and innovations.