Paul Romer

Paul Michael Romer (born November 6, 1955)[1] is an American economist at the NYU Department of Economics and co-recipient of the Nobel Memorial Prize in Economic Sciences (shared with William Nordhaus) in 2018 for his contributions to endogenous growth theory. He was awarded the prize "for integrating technological innovations into long-run macroeconomic analysis".[2]

Paul Romer
Romer in 2005
Chief Economist of the World Bank
In office October 2016 – 24 January 2018
President	Jim Yong Kim
Preceded by	Kaushik Basu
Succeeded by	Shanta Devarajan (Acting)
Personal details
Born	Paul Michael Romer November 6, 1955 Denver, Colorado, U.S.
Education	University of Chicago (SB, PhD) Massachusetts Institute of Technology Queen's University
Awards	Nobel Memorial Prize in Economic Sciences (2018)
Scientific career
Fields	Economics
Institutions	New York University Stanford University UC Berkeley University of Chicago University of Rochester
Thesis	Dynamic competitive equilibria with externalities, increasing returns and unbounded growth (1983)
Doctoral advisor	José Scheinkman Robert Lucas Jr.
Other academic advisors	Russell Davidson Ivar Ekeland
Doctoral students	Sérgio Rebelo Maurice Kugler
Influences	Joseph Schumpeter Robert Solow
Website	https://paulromer.net/

Romer was chief economist and senior vice president of the World Bank until he resigned in January 2018 following a controversy arising from his claim of possible political manipulation of Chile's "ease of doing business" ranking.[3][4] Romer took leave from his position as professor of economics at NYU when he joined the World Bank.

Romer has also been a professor of economics at the University of Chicago, the University of California, Berkeley, the Stanford University's Graduate School of Business,[5] and the University of Rochester.[6][7] In addition, he was a senior fellow at Stanford's Center for International Development, the Stanford Institute for Economic Policy Research, the Hoover Institution, as well as a fellow at the Center for Global Development.[6][8]

Early life and education

Romer was born to former Colorado governor Roy Romer and Beatrice "Bea" Miller. He has four brothers and two sisters. One of his brothers, Chris Romer, is a former Colorado state senator.[9]

He graduated in 1977 from Phillips Exeter Academy. He earned his Bachelor of Science in mathematics [10] and a PhD in economics in 1983,[1] both from the University of Chicago, after graduate studies at Massachusetts Institute of Technology from 1977 to 1979 and at Queen's University (Kingston, Canada) from 1979 to 1980.[11]

Career

Romer's most important work is in the field of economic growth, and he has made important contributions in the development of endogenous growth theory. He was named one of America's 25 most influential people by Time magazine in 1997,[12] and he was awarded the Horst Claus Recktenwald Prize in Economics in 2002. In 2015, he was recipient of the John R. Commons Award, given by the economics honor society Omicron Delta Epsilon.[13]

Academia

Romer's research on economic growth followed extensive studies of long-run growth during the 1950s and 1960s.[14] The Solow–Swan model, for example, established the primacy of technological progress in accounting for sustained increases in output per worker. His 1983 dissertation, supervised by José Scheinkman and Robert Lucas Jr., amounted to constructing mathematical representations of economies in which technological change is the result of the intentional actions of people, such as research and development. It led to two Journal of Political Economy articles published in 1986 and 1990, respectively, which started endogenous growth theory.

He taught at the University of Rochester, the University of Chicago, the University of California, Berkeley, Stanford University and New York University.[6]

Business

Romer temporarily left academia in 2001 to found Aplia, a company which produces online problem sets for college students; Aplia was purchased in 2007 by Cengage Learning.

He is credited with the quote "A crisis is a terrible thing to waste," which he said during a November 2004 venture-capitalist meeting in California. Although he was referring to the rapidly rising education levels in other countries compared to the United States, the quote became a rallying concept for economists and consultants looking for constructive opportunities amid the Great Recession.[15]

Charter cities

Romer has attempted to replicate the success of charter cities and make them an engine of economic growth in developing countries. He promoted this idea in a TED talk in 2009,[16] and he has argued that with better rules and institutions less developed nations can be set on a different and better trajectory for growth.[17] In his model, a host country would turn responsibility for a charter city over to a more developed trustee nation, which would allow for new rules of governance to emerge. People could "vote with their feet" for or against these rules.[9]

The government of Honduras considered creating charter cities, though without the oversight of a third-party government, which some argue is neo-colonialism.[9] Romer served as chair of a "transparency committee" but resigned in September 2012 when the Honduran government agency responsible for the project signed agreements with international developers without involvement of the committee.[18]

World Bank

He became World Bank Chief Economist in October 2016. He resigned on 24 January 2018,[3][4] following a controversy in which he stated in an interview with The Wall Street Journal on January 12,[19][4] that during the tenure of Chile's socialist President Michelle Bachelet from 2014 onwards, Chile's ranking for ease of doing business had been downgraded by the World Bank as a result of changes of methodology which he claimed may have been politically motivated,[4] a claim denied by the former World Bank economist responsible for compiling Chile's ranking, Chilean economist Augusto Lopez-Claros.[20][21]

Nobel Memorial Prize in Economics

Paul Romer during Nobel press conference in Stockholm, December 2018

Romer shared the 2018 Prize with William Nordhaus.[22] In choosing Romer as one of the 2018 economics laureates, the Royal Swedish Academy of Sciences stated that he had shown "how knowledge can function as a driver of long-term economic growth. . . . [Prior macroeconomic studies] had not modelled how economic decisions and market conditions determine the creation of new technologies. Paul Romer solved this problem by demonstrating how economic forces govern the willingness of firms to produce new ideas and innovations."[2]

After receiving the prize, Romer described how he started thinking about the relationship between growth and innovation: "The question that I first asked was, why was progress . . . speeding up over time? It arises because of this special characteristic of an idea, which is if [a million people try] to discover something, if any one person finds it, everybody can use the idea."[23]

The same day he received the award, Romer married Caroline Weber, a professor of French Literature at Barnard College.[24]

Publications

• "Growth Cycles", with George Evans and Seppo Honkapohja (American Economic Review, June 1998). JSTOR 116846
• "Preferences, Promises, and the Politics of Entitlement" (Individual and Social Responsibility: Child Care, Education, Medical Care, and Long-Term Care in America, Victor R. Fuchs (ed.), Chicago: University of Chicago Press, 1995).
• "New Goods, Old Theory, and the Welfare Costs of Trade Restrictions," Journal of Development Economics, No. 43 (1994), pp. 5–38.
• "Looting: The Economic Underworld of Bankruptcy for Profit" with George Akerlof (Brookings Papers on Economic Activity 2, William C. Brainard and George L. Perry (eds.), 1993, pp. 1–74). JSTOR 2534564
• "Economic Integration and Endogenous Growth," with Luis Rivera-Batiz (Quarterly Journal of Economics CVI, May 1991, pp. 531–55). JSTOR 2937946
• "Endogenous Technological Change" (Journal of Political Economy, October 1990). JSTOR 2937632
• "Increasing Returns and Long Run Growth" (Journal of Political Economy, October 1986). JSTOR 1833190
• "Cake Eating, Chattering and Jumps: Existence Results for Variational Problems" (Econometrica 54, July 1986, pp. 897–908). JSTOR 1912842

See also

• Endogenous growth theory
• Good governance
• Special economic zone
• Mathiness

References

1. Romer, Paul Michael (1983). Dynamic competitive equilibria with externalities, increasing returns and unbounded growth (Ph.D.). The University of Chicago. OCLC 28795806. ProQuest 303206758.
2. "The Prize in Economic Sciences 2018 Press Release" (PDF). Nobelprize.org. October 8, 2018.
3. Donnan, Shawn (January 25, 2018). "Outspoken World Bank chief economist Paul Romer exits: Emails reveal clashes over issues ranging from grammar to methodology". Financial Times.
4. "World Bank economist Paul Romer quits after Chile comments". Reuters. January 24, 2018. Retrieved October 8, 2018.
5. "N.Y.U. Lands Top Economist for Cities Project". New York Times. May 27, 2011. Retrieved May 27, 2011.
6. "CV (PAUL M. ROMER)" (PDF). Retrieved October 11, 2019.
7. "Paul Romer". paulromer.net. Retrieved October 8, 2018.
8. "Risk and Return". Hoover Digest. No. 2. 1996. Archived from the original on August 2, 2012.
9. "The Politically Incorrect Guide to Ending Poverty". The Atlantic. July–August 2010.
10. "Economist Paul Romer, SB'77, PhD'83, wins share of Nobel Prize". uchicago news. August 8, 2018.
11. Warsh, David (2007). Knowledge and the Wealth of Nations. New York: Norton. pp. 196–201. ISBN 978-0-393-32988-9.
12. "Time's 25 Most Influential Americans". Time Magazine. Time Inc. April 21, 1997. Retrieved December 21, 2007.
13. https://www.omicrondeltaepsilon.org/awards.html
14. Solow, Robert M. (1994). "Perspectives on Growth Theory". Journal of Economic Perspectives. 8 (1): 45–54. doi:10.1257/jep.8.1.45. JSTOR 2138150.
15. Rosenthal, Jack (July 31, 2009). "A Terrible Thing to Waste". The New York Times. Retrieved October 9, 2011.
16. Paul Romer: Why the world needs charter cities, TED talk August 2009
17. Gunn, Dwyer (September 29, 2009). "Can "Charter Cities" Change the World? A Q&A With Paul Romer". The New York Times. Retrieved May 22, 2010.
18. "Plan for Charter City to Fight Honduras Poverty Loses Its Initiator". New York Times. September 30, 2012.
19. Josh Zumbrun; Ian Talley (January 12, 2018). "World Bank Unfairly Influenced Its Own Competitiveness Rankings". Wall Street Journal. Retrieved October 8, 2018.
20. "Chile complains of World Bank unfair treatment". BBC. January 15, 2018. Retrieved October 8, 2018. In an interview given to the Chilean newspaper El Mercurio, the World Bank economist who had been responsible for the rankings, Augusto Lopez-Claros, said changes in methodology "took place in a transparent and open context," denying any political bias.
21. Oscar Medina; Andrew Rosati (January 13, 2018). "World Bank to Probe Chile's Business Ranking After Bias Alleged". Bloomberg. Retrieved October 8, 2018. Chilean economist Augusto Lopez-Claros, who was in charge of compiling Chile’s ranking for the World Bank report, said accusations of political manipulation were “wholly without merit.”
22. Appelbaum, Binyamin (October 8, 2018). "2018 Nobel in Economics Awarded to William Nordhaus and Paul Romer". The New York Times.
23. Kiernan, Paul; Sugden, Joanna (October 8, 2018). "Two Top U.S. Economists Win Nobel for Work on Growth and Climate: Research of William D. Nordhaus and Paul M. Romer has had immense impact on global policy making, the Academy says". The Wall Street Journal.
24. Mallozzi, Vincent M. (December 11, 2018). "Arts Meets Science and Chemistry Wins the Day". The New York Times. Retrieved October 11, 2019.

External links

• Media related to Paul Romer at Wikimedia Commons
• Paul Romer's web site
• Paul Romer on Nobelprize.org including his Prize Lecture 8 December 2018 On the Possibility of Progress