The US duo was awarded the 2018 Nobel Prize in Economic Sciences for developing new methods that serve for the welfare of the world's population and provides long-term sustainable growth in the global economy.
The two "do not deliver conclusive answers, but their findings have brought us considerably closer to answering the question of how we can achieve sustained and sustainable global economic growth", it said. To help in that effort, he constructed integrated economic and scientific computer models to determine the most efficient ways to cope with climate change. Instead, by agreeing on a global price for burning carbon that reflects its whole cost, this primary cause of rising temperatures could be traded and taxed, putting market forces to work on the problem.
Romer, of New York University's Stern School of Business, is best known for his work on endogenous growth, a theory rooted in investing in knowledge and human capital. The Intergovernmental Panel on Climate Change, made up of thousands of scientists, finds the earth's temperature has risen 1 degree Celsius - or 1.8 degrees Fahrenheit - since pre-industrial times.
Two American researchers have been awarded the Nobel Prize for economics for studying the interplay of climate change and technological innovation with economics.
"Humans are capable of incredible accomplishments if we set our minds to it", Romer added. At a news conference Monday, Romer said his research has left him optimistic that society can solve even a threat as deeply challenging as the warming of the planet.
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When Swedish industrialist Alfred Nobel established the prizes in his will, economics wasn't one of the undertakings he wanted honored.
Per Stromberg is the head of the Nobel economics prize committee.
Romer laid the foundation for "endogenous growth theory", which predicts economic growth based on internal factors such as investment in human capital rather than exclusively on external factors, such as bringing in more advanced equipment and technology from the outside. Five people have won the Nobel Prize in economic sciences while serving as members of the MIT faculty; another 11 MIT alumni, including Nordhaus, have won the prize.
But we can hope that this year's Nobel Memorial Prize in Economic Sciences will motivate the people who matter: the policy makers and leaders who can use these tools to rally the power of market economics to drive action.
Last year, the honour went to U.S. economist Richard Thaler, a co-founder of the so-called "nudge" theory.