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Paul Romer

Paul Michael Romer.
Residence USA United States
Nationality American United States
Fields Economist
Institutions Stanford University
Alma mater University of Chicago

Paul Michael Romer (born 1955) is an American economist, entrepreneur, and activist. He is also a Senior Fellow at Stanford University's Center for International Development and the Stanford Institute for Economic Policy Research. He is considered an expert on economic growth.

Romer earned a B.S. in physics in 1977 and a Ph.D. in economics in 1983, both from the University of Chicago. He was named one of America's 25 most influential people by Time Magazine in 1997[1], and in 2000 started the online educational company Aplia, which was purchased in 2007 by Cengage Learning. Romer has been awarded the Horst Claus Recktenwald Prize in Economics in Nuremberg, Germany. He is the son of former Colorado Governor Roy Romer.

Contents

Academic contributions

Paul Romer's most important work is in the field of economic growth. Economists studied long-run growth extensively during the 1950s and 1960s. The work of Robert Solow, for example, established the primacy of technological progress in accounting for sustained increases in output per worker. Romer's articles published in 1986 and 1990 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.

Romer is credited with the witty quote, "A crisis is a terrible thing to waste." This quote became a sounding horn by economists and consultants looking to make a positive take away from the economic downturn of 2007-2009.

His latest contribution has been in trying to replicate the success of charter cities and make it an engine of economic growth.[2] With better rules and institutions, undeveloped nations can be set on a different and better trajectory for growth. He believes in this idea so much that he has given up his tenured position at Stanford to devote all his time and energy into it.[3]

Dominant theme

“Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable. A useful metaphor for production in an economy comes from the kitchen. To create valuable final products, we mix inexpensive ingredients together according to a recipe. The cooking one can do is limited by the supply of ingredients, and most cooking in the economy produces undesirable side effects. If economic growth could be achieved only by doing more and more of the same kind of cooking, we would eventually run out of raw materials and suffer from unacceptable levels of pollution and nuisance. History teaches us, however, that economic growth springs from better recipes, not just from more cooking. New recipes generally produce fewer unpleasant side effects and generate more economic value per unit of raw material.

Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered. And every generation has underestimated the potential for finding new recipes and ideas. We consistently fail to grasp how many ideas remain to be discovered. Possibilities do not add up. They multiply.”[4]

Publications

  • "Growth Cycles," with George Evans and Seppo Honkapohja (American Economic Review, June 1998). Jstor link
  • "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 link
  • "Economic Integration and Endogenous Growth," with Luis Rivera-Batiz (Quarterly Journal of Economics CVI, May 1991, pp. 531-55). Jstor link
  • "Endogenous Technological Change" (Journal of Political Economy, October 1990). Jstor link
  • "Increasing Returns and Long Run Growth" (Journal of Political Economy, October 1986). Jstor link
  • "Cake Eating, Chattering and Jumps: Existence Results for Variational Problems" (Econometrica 54, July 1986, pp. 897-908). Jstor link

See also

References

External links

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