The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, 2018

• Date: 01 July 2019
• DOI: http://doi.org/10.1111/sjoe.12380
• Published date: 01 July 2019

Scand. J. of Economics 121(3), 857–858, 2019

DOI: 10.1111/sjoe.12380

The Sveriges Riksbank Prize in Economic

Sciences in Memory of Alfred Nobel, 2018

Press release from the Royal Swedish Academy of Sciences

The Royal Swedish Academy of Sciences has decided to award

the Sveriges Riksbank Prize in Economic Sciences in Memory

of Alfred Nobel for 2018 to

William D. Nordhaus, Yale University, New Haven, CT, USA

“for integrating climate change into long-run macroeconomic

analysis”

and

Paul M. Romer, NYU Stern School of Business, New York, NY,

USA

“for integrating technological innovations into long-run

macroeconomic analysis”.

Integrating Innovation and Climate with Economic Growth

William D. Nordhaus and Paul M. Romer have designed methods for

addressing some of the most basic and pressing questions of our time about

how we create long-term sustained and sustainable economic growth.

At its heart, economics deals with the management of scarce resources.

Nature dictates the main constraints on economic growth, and our

knowledge determines how well we deal with these constraints. This year’s

laureates, William Nordhaus and Paul Romer, have significantly broadened

the scope of economic analysis by constructing models that explain how

the market economy interacts with nature and knowledge.

Technological change: Romer demonstrates how knowledge can

function as a driver of long-term economic growth. When annual economic

growth of a few percent accumulates over decades, it transforms people’s

lives. Although previous macroeconomic research emphasized technological

innovation as the primary driver of economic growth, it did not model how

economic decisions and market conditions determine the creation of new

technologies. Romer solved this problem by demonstrating how economic

forces govern the willingness of firms to produce new ideas and innovations.

Romer’s solution, which was published in 1990, laid the foundation

of what is now called “endogenous growth theory”. The theory is both

C

The editors of The Scandinavian Journal of Economics 2019.