Paul Romer

NYU Stern School of Business

Paul Romer is an American economist and University Professor at NYU's Stern School of Business. He shared the 2018 Nobel Prize in Economic Sciences with William Nordhaus for integrating technological innovation into long-run macroeconomic analysis, developing what is known as endogenous growth theory. Romer's 1986 dissertation and subsequent 1990 paper Endogenous Technological Change fundamentally transformed how economists think about long-run economic growth. Prior to Romer's work, the dominant Solow growth model treated technological progress as a free manna that falls from the sky—an unexplained exogenous factor. Romer showed how technological progress arises endogenously from deliberate investment decisions by profit-maximizing firms: knowledge is a non-rival good (one person's use does not prevent another's) and partially excludable through patents and trade secrets, creating incentives for private R&D investment that generates spillovers benefiting the entire economy. This framework—dubbed new growth theory—has profound policy implications: unlike Solow's model, endogenous growth models predict that subsidies to research and education can permanently raise the growth rate. Romer has also been an influential advocate for charter cities—special economic zones with reformed governance designed to stimulate development in poor countries. He served as Chief Economist of the World Bank (2016–2018), leaving controversially over data integrity concerns. He has received the Arrow Prize, the Horowitz Prize, and the Kempe Prize.