Paul Romer: Ideas, Nonrivalry, and Endogenous Growth

Paul Romer: Ideas, Nonrivalry, and Endogenous Growth

Journal of Economics. July
2019, Vol. 121, Issue 3, Pages 859-883

In 2018, Paul Romer and William Nordhaus shared the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Romer was recognized “for integrating technological innovations into long‐run macroeconomic analysis”. This article reviews his prize‐winning contributions. Romer, together with others, rejuvenated the field of economic growth. He developed the theory of endogenous technological change, in which the search for new ideas by profit‐maximizing entrepreneurs and researchers is at the heart of economic growth. Underlying this theory, he pinpointed that the nonrivalry of ideas is ultimately responsible for the rise in living standards over time.