William D Nordhaus & Paul M Romer Awarded Nobel Prize in Economics

The Royal Swedish Academy of Sciences announced the Sveriges Riksbank Prize in Economics.

The Nobel Prize. 

(Photo Courtesy: Twitter/@NobelPrize)

The Royal Swedish Academy of Sciences, on Monday 8 October decided to award the Sveriges Riksbank Prize in Economic Sciences to William D Nordhaus and Paul M Romer. The award has been announced in the Memory of Alfred Nobel 2018.

William Nordhaus and Paul Romer, have been awarded for designing methods that address some of our time’s most fundamental and pressing issues: long term sustainable growth in the global economy and the welfare of the world’s population.  

William Nordhaus’ research shows how economic activity interacts with basic chemistry and physics to produce climate change.

Nordhaus was the first person to create a quantitative model that describes the global interplay between the economy and the climate.

His research is now widespread and is used to examine the consequences of climate policy interventions like carbon taxes.  

It also shows that the most efficient 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.

Paul Romer’s research shows how the accumulation of ideas sustains long-term economic growth.

He has also demonstrated how economic forces govern the willingness of firms to produce new ideas and innovations.

It laid down the foundation of what is now called endogenous growth theory. The theory has also generated big amounts of new research into the regulations and policies that encourage new ideas and long-term prosperity.

(With inputs from The Nobel Prize)