Paul Romer
Paul Romer in 2005.jpg
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
(1955-11-06) November 6, 1955 (age 62)[1]
Denver, Colorado, U.S.
Education

Phillips Exeter Academy

University of Chicago (BSc, MA, 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

Paul Michael Romer (born November 6, 1955) is an American economist, a pioneer of endogenous growth theory, and a co-recipient of the 2018 Nobel Memorial Prize in Economic Sciences. He received the Nobel "for integrating technological innovations into long-run macroeconomic analysis".[2]

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] He had been on leave from his position as professor of economics at the Stern School of Business at New York University.[5]

Prior to New York University, Romer was a professor of economics at the University of Chicago, the University of California, Berkeley, the Stanford University's Graduate School of Business, and the University of Rochester.[6][7] In addition, Romer 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]

Romer graduated from Phillips Exeter Academy, and earned a B.S. in mathematics in 1977 and a MA in economics in 1978 as well as a Ph.D. in economics in 1983,[1] all from the University of Chicago, after graduate studies at Massachusetts Institute of Technology and Queen's University.[10]

Career

Romer's most important work is in the field of economic growth, and he has made vital contributions in the development of endogenous growth theory. He was named one of America's 25 most influential people by Time magazine in 1997,[11] and he was awarded the Horst Claus Recktenwald Prize in Economics in 2002.

Academia

Romer's research on economic growth followed extensive studies of long-run growth during the 1950s and 1960s.[12] The Solow–Swan model, for example, established the primacy of technological progress in accounting for sustained increases in output per worker. Romer's 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

He 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.

Romer 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.[13]

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.[14] Romer has argued that with better rules and institutions, less developed nations can be set on a different and better trajectory for growth.[15] 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.[16]

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,[17][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.[18][19]

Nobel Memorial Prize in Economics

Romer shared the 2018 Nobel with William Nordhaus.[20] 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]

Publications