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Paul Romer

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For the 19th and 20th-century French pediatrician, see Paul Rohmer.

Paul Romer
Romer smiling
Romer in 2005
Chief Economist of the World Bank
In office
October 2016 – January 24, 2018
PresidentJim Yong Kim
Preceded byKaushik Basu
Succeeded byShanta Devarajan (Acting)
Personal details
Born
Paul Michael Romer

(1955-11-06) November 6, 1955 (age 69)
Denver, Colorado, U.S.
EducationPhillips Exeter Academy University of Chicago (SB, PhD)
Massachusetts Institute of Technology
Queen's University
AwardsNobel Memorial Prize in Economic Sciences (2018)
WebsiteOfficial website
Scientific career
FieldsEconomics
InstitutionsNew York University
Stanford University
UC Berkeley
University of Chicago
University of Rochester
ThesisDynamic competitive equilibria with externalities, increasing returns and unbounded growth (1983)
Doctoral advisorJosé Scheinkman
Robert Lucas Jr.
Other academic advisorsRussell Davidson
Ivar Ekeland
Doctoral studentsSérgio Rebelo
Maurice Kugler

Paul Michael Romer (born November 6, 1955)[1] is an American economist and policy entrepreneur who is a University Professor in Economics at Boston College.[2] Romer is best known as the former Chief Economist of the World Bank and for co-receiving the 2018 Nobel Memorial Prize in Economic Sciences (shared with William Nordhaus) for his work in endogenous growth theory.[3] He also coined the term "mathiness," which he describes as misuse of mathematics in economic research.

Before joining Boston College, Romer was a professor at NYU, the University of Chicago, the University of California, Berkeley, Stanford University's Graduate School of Business,[4] and the University of Rochester.[5][6] 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.[7][8] Romer took leave from his position as professor of economics at NYU when he joined the World Bank, and returned to NYU after his term. In addition, he has also been a researcher at the National Bureau of Economic Research, Stanford's Center for International Development, the Stanford Institute for Economic Policy Research, the Hoover Institution, as well as a fellow at the American Academy of Arts and Sciences and the Center for Global Development.[5][9]

Early life and education

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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.[10]

He graduated in 1973[11] from Phillips Exeter Academy. He earned his Bachelor of Science in mathematics[12] and a PhD in economics in 1983,[1] both from the University of Chicago, after graduate studies at Massachusetts Institute of Technology from 1977 to 1979 and at Queen's University (Kingston, Canada) from 1979 to 1980.[13]

Career

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Romer's most important work is in the field of economic growth, and he has made important contributions in the development of endogenous growth theory. He was named one of America's 25 most influential people by Time magazine in 1997,[14] and he was awarded the Horst Claus Recktenwald Prize in Economics in 2002. In 2015, he was recipient of the John R. Commons Award, given by the economics honor society Omicron Delta Epsilon.[15]

Academia

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Romer's research on economic growth followed extensive studies of long-run growth during the 1950s and 1960s.[16] The Solow–Swan model, for example, established the primacy of technological progress in accounting for sustained increases in output per worker. His 1983 dissertation, supervised by José Scheinkman and Robert Lucas Jr., showed mathematical models of economies in which technological change resulted from intentional actions of people, such as research and development. It led to two Journal of Political Economy articles published in 1986 and 1990, which started endogenous growth theory.

Romer taught at the University of Rochester, the University of Chicago, the University of California, Berkeley, Stanford University and New York University. At New York University, he founded the Marron Institute of Urban Management. Its objective is to assist cities in planning its future developments, specifically improving the safety, health, and mobility of citizens.[5]

Business

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Romer temporarily left academia in 2001 to found Aplia, a company which produces online problem sets for college students. Students have submitted upwards of 2.4 billion answers to homework problems on the Aplia website. Aplia was purchased in 2007 by Cengage Learning.

He 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.[17]

Charter cities

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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,[18] and he has argued that with better rules and institutions less developed nations can be set on a different and better trajectory for growth.[19] 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.[10]

The government of Honduras considered creating charter cities (called Zone for Employment and Economic Development), though without the oversight of a third-party government, which some argue is neo-colonialism.[10] 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.[20]

World Bank

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He became World Bank Chief Economist in October 2016. He resigned on January 24, 2018,[7][8] following a controversy in which he stated in an interview with The Wall Street Journal on January 12,[21][8] 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,[8] a claim denied by the former World Bank economist responsible for compiling Chile's ranking, Chilean economist Augusto Lopez-Claros.[22][23]

Nobel Memorial Prize in Economics

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Paul Romer during Nobel press conference in Stockholm, December 2018

Romer shared the 2018 Prize with William Nordhaus.[24] 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."[3]

After receiving the prize, Romer described how he started thinking about the relationship between growth and innovation: "The question that I first asked was, why was progress . . . speeding up over time? It arises because of this special characteristic of an idea, which is if [a million people try] to discover something, if any one person finds it, everybody can use the idea."[25]

The same day he received the award, Romer married Caroline Weber, a professor of French Literature at Barnard College.[26]

Publications

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  • "Growth Cycles", with George Evans and Seppo Honkapohja (American Economic Review, June 1998). JSTOR 116846
  • "Preferences, Promises, and the Politics of Entitlement" (Individual and Social Responsibility: Child Care, Education, Medical Care, and Long-Term Care in America, Victor R. Fuchs (ed.), Chicago: University of Chicago Press, 1995).
  • "New Goods, Old Theory, and the Welfare Costs of Trade Restrictions," Journal of Development Economics, No. 43 (1994), pp. 5–38.
  • "Looting: The Economic Underworld of Bankruptcy for Profit" with George Akerlof (Brookings Papers on Economic Activity 2, William C. Brainard and George L. Perry (eds.), 1993, pp. 1–74). JSTOR 2534564
  • "Economic Integration and Endogenous Growth," with Luis Rivera-Batiz (Quarterly Journal of Economics CVI, May 1991, pp. 531–55). JSTOR 2937946
  • "Endogenous Technological Change" (Journal of Political Economy, October 1990). JSTOR 2937632
  • "Increasing Returns and Long Run Growth" (Journal of Political Economy, October 1986). JSTOR 1833190
  • "Cake Eating, Chattering and Jumps: Existence Results for Variational Problems" (Econometrica 54, July 1986, pp. 897–908). JSTOR 1912842

See also

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References

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  1. ^ a b Romer, Paul Michael (1983). Dynamic competitive equilibria with externalities, increasing returns and unbounded growth (Ph.D.). The University of Chicago. OCLC 28795806. ProQuest 303206758.
  2. ^ "Paul Romer". paulromer.net. Retrieved June 22, 2021.
  3. ^ a b "The Prize in Economic Sciences 2018 Press Release" (PDF). Nobelprize.org. October 8, 2018.
  4. ^ "N.Y.U. Lands Top Economist for Cities Project". New York Times. May 27, 2011. Retrieved May 27, 2011.
  5. ^ a b c "CV (PAUL M. ROMER)" (PDF). Archived from the original (PDF) on October 9, 2018. Retrieved October 11, 2019.
  6. ^ "Paul Romer". paulromer.net. Retrieved October 8, 2018.
  7. ^ a b Donnan, Shawn (January 25, 2018). "Outspoken World Bank chief economist Paul Romer exits: Emails reveal clashes over issues ranging from grammar to methodology". Financial Times.
  8. ^ a b c d "World Bank economist Paul Romer quits after Chile comments". Reuters. January 24, 2018. Retrieved October 8, 2018.
  9. ^ "Risk and Return". Hoover Digest. No. 2. 1996. Archived from the original on August 2, 2012.
  10. ^ a b c "The Politically Incorrect Guide to Ending Poverty". The Atlantic. July–August 2010.
  11. ^ "Paul Romer '73 awarded Nobel Prize in economics". Phillips Exeter Academy. November 8, 2018. Retrieved April 11, 2021.
  12. ^ "Economist Paul Romer, SB'77, PhD'83, wins share of Nobel Prize". uchicago news. August 8, 2018.
  13. ^ Warsh, David (2007). Knowledge and the Wealth of Nations. New York: Norton. pp. 196–201. ISBN 978-0-393-32988-9.
  14. ^ "Time's 25 Most Influential Americans". Time Magazine. Time Inc. April 21, 1997. Retrieved December 21, 2007.
  15. ^ "Omicron Delta Epsilon - the International Economics Honor Society".
  16. ^ Solow, Robert M. (1994). "Perspectives on Growth Theory". Journal of Economic Perspectives. 8 (1): 45–54. doi:10.1257/jep.8.1.45. JSTOR 2138150.
  17. ^ Rosenthal, Jack (July 31, 2009). "A Terrible Thing to Waste". The New York Times. Retrieved October 9, 2011.
  18. ^ Paul Romer: Why the world needs charter cities, TED talk August 2009
  19. ^ Gunn, Dwyer (September 29, 2009). "Can "Charter Cities" Change the World? A Q&A With Paul Romer". The New York Times. Retrieved May 22, 2010.
  20. ^ "Plan for Charter City to Fight Honduras Poverty Loses Its Initiator". New York Times. September 30, 2012.
  21. ^ Josh Zumbrun; Ian Talley (January 12, 2018). "World Bank Unfairly Influenced Its Own Competitiveness Rankings". Wall Street Journal. Retrieved October 8, 2018.
  22. ^ "Chile complains of World Bank unfair treatment". BBC. January 15, 2018. Retrieved October 8, 2018. In an interview given to the Chilean newspaper El Mercurio, the World Bank economist who had been responsible for the rankings, Augusto Lopez-Claros, said changes in methodology "took place in a transparent and open context," denying any political bias.
  23. ^ Oscar Medina; Andrew Rosati (January 13, 2018). "World Bank to Probe Chile's Business Ranking After Bias Alleged". Bloomberg. Retrieved October 8, 2018. Chilean economist Augusto Lopez-Claros, who was in charge of compiling Chile's ranking for the World Bank report, said accusations of political manipulation were "wholly without merit."
  24. ^ Appelbaum, Binyamin (October 8, 2018). "2018 Nobel in Economics Awarded to William Nordhaus and Paul Romer". The New York Times.
  25. ^ Kiernan, Paul; Sugden, Joanna (October 8, 2018). "Two Top U.S. Economists Win Nobel for Work on Growth and Climate: Research of William D. Nordhaus and Paul M. Romer has had immense impact on global policy making, the Academy says". The Wall Street Journal.
  26. ^ Mallozzi, Vincent M. (December 11, 2018). "Arts Meets Science and Chemistry Wins the Day". The New York Times. Retrieved October 11, 2019.
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2016–2018 		Succeeded by
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