Nobel Prize In Economic Science Was Awarded To Nordhaus and Romer

William D Nordhaus and Paul M Romer awarded Nobel prize in Economic Science

Highlights

The 2018 Nobel Memorial Prize in Economic Science was awarded on 9th October 2018.

American economists, William D Nordhaus and Paul M Romer, was awarded.

Their work highlighting the importance of government policy in fostering sustainable economic growth.

Fact

Nordhaus, 77, is a professor at Yale. He was honoured for pioneering the assessment of the economic impact of climate change, including his advocacy of governments taxing carbon emissions. 

Romer, 62, is a professor at New York University. He was honoured for his work on the role of policy in encouraging technological innovation. 

The award came on the same day that a United Nations panel on climate change released a report warning of dire consequences from climate change and urging governments to respond to the problem with greater urgency. 

Background

Nordhaus, 77, graduated from Yale and then earned a doctorate in economics from the Massachusetts Institute of Technology in 1967. That year, he returned to Yale as a member of the economics faculty, and he has remained there ever since.

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In the 1960s and the 1970s, amid rising concern about pollution, economists began to argue that taxation was the most effective solution: The government should charge people for polluting.

Nordhaus argued the best way to limit emissions was to calculate the cost of a fixed level of emissions and then require firms or governments to pay for those costs.

The Nobel Prize committee cited Nordhaus for his work in showing that “the most efficient remedy for problems caused by greenhouse gases is a global scheme of universally imposed carbon taxes.”

Nordhaus also was honored for his role in developing a model that allows economists to analyse the costs of climate change.

Romer, 62, sought to explain the role of technological advances in driving economic growth. His work was inspired by a desire to understand the remarkable acceleration in growth that began with the Industrial Revolution.

Romer’s big idea was to argue that policymakers could foster technological innovation, for example, by investing in research and development and by writing patent laws that provided sufficient rewards for new ideas without letting inventors permanently monopolise those rewards.

He argued that national differences in such public policies helped to explain differences in economic growth rates. 

In 2016, Romer was named chief economist of the World Bank, a prestigious perch for a development economist. But he resigned 15 months later, in January 2018.

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