Paul Romer

Paul Romer is an American economist whose work formalized how ideas, research, and human capital can generate sustained economic growth. He shared the 2018 Nobel Memorial Prize in Economic Sciences.

Endogenous growth theory: A family of economic models explaining long-run growth through forces generated within the economy. Romer’s research helped establish this approach by modeling technological change as an economic outcome.
Romer model: An endogenous growth model in which firms invest in research to create new, partially excludable ideas. This model makes the production of ideas the engine of sustained growth.
Robert Solow: An American economist whose growth model treats technological progress as the source of long-run growth per person. Romer’s work addressed the part of Solow’s framework that left technological progress unexplained.
2018 Nobel Memorial Prize in Economic Sciences: The economics prize awarded to William D. Nordhaus and Paul Romer for integrating climate change and technological innovation into long-run macroeconomic analysis. Romer received half the prize for integrating technological innovation into long-run growth analysis.
Economic development: The process by which an economy improves living standards, productive capacity, and economic opportunities. Romer’s emphasis on ideas and skills offers an account of growth beyond capital accumulation.
Economic growth: An increase over time in an economy’s production of goods and services. Romer’s models explain how economies can sustain growth rather than merely recover from shocks.
Knowledge spillover: A benefit from knowledge that reaches people or firms beyond those who created it. Research can raise productivity beyond the innovating firm, connecting private decisions to economy-wide growth.
Solow–Swan model: A neoclassical growth model in which saving and population shape output, while long-run growth depends on exogenous technological progress. Romer replaced its externally given technology with innovation arising from economic choices.
William Nordhaus: An American economist known for analyzing the economics of climate change and natural resources. Nordhaus shared the 2018 prize with Romer for research on long-run economic analysis.
Innovation policy: Public policy that shapes the creation, adoption, and diffusion of new technologies and ideas. His models highlight how incentives and spillovers can make research policy relevant to growth.

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