Nordhaus and Romer

The 2018 Nobel Prize in economics has gone to Yale’s William Nordhaus for work in environmental economics and NYU’s Paul Romer for work on economic growth. Both have long been considered front-runners for the award (Romer was described as a likely winner back in the 1990s) though the combination is unexpected. (The Nobel committee may be making a political statement, as Mark suggests, by tying both researchers’ work to climate change, and a few journalists seem to have fallen for it.)

Neither economist directly engages Austrian ideas though Romer builds on Schumpeter’s ideas on economic growth and has been compared to Hayek in his emphasis on knowledge as a driver of economic progress. Austrians have also appreciated Romer’s 2015 critique of “mathiness” in contemporary economics. 

Nicolai Foss wrote an interesting critique of Romer-style “new growth theory” in 2006, arguing that “its essential ideas have been known for a long time, and . . . it does not really make contact with a large literature on institutions and economic change.” 

More to come. 

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