By Adrian Cho
The 2018 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel
Credit: Nobel Foundation
The Prize in Economic Sciences 2018 has been awarded to William D. Nordhaus “for integrating climate change into long-run macroeconomic analysis” and Paul M. Romer “for integrating technological innovations into long-run macroeconomic analysis.” Their findings have significantly broadened the scope of economic analysis by constructing models that explain how the market economy interacts with nature and knowledge.
William Nordhau, of Yale University in New Haven, Connecticut, built a model that integrated economics, the carbon cycle and climate theory. Known as the Dynamic Integrated Climate-Economy (DICE) model, it built on traditional growth theory but added fossil fuels into the mix. Nordhaus’ research 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.
Paul Roemer, of New York University’s Stern School of Business in New York City, concluded that technological growth was behind long-term economic growth. His vision was to model new ideas as good and services. The Nobel committee said “Romer’s research laid the foundation of what is now called endogenous growth theory. The theory has generated vast amounts of new research into the regulations and policies that encourage new ideas and long-term prosperity.”
Source: Science Mag