Paul Romer shared the 2018 Nobel Memorial Prize in Economic Sciences for integrating technological innovations into long-run macroeconomic analysis.
Romer’s work helped explain technological knowledge as an outcome of economic decisions rather than as something that simply appears from outside the model. Firms and researchers invest in ideas, and those ideas can be used repeatedly, creating effects that differ from the use of ordinary physical goods.
This research became central to endogenous growth theory, which studies how incentives, education, research, and innovation can influence sustained economic growth. It also helped economists analyze why policies and institutions may affect a country’s long-run growth rate.
Romer shared the 2018 prize with William Nordhaus. Nordhaus was recognized for integrating climate change into long-run macroeconomic analysis. Robert Solow, whose earlier growth model treated technological progress differently, won the economics award in 1987.