Paul Romer

Paul Romer
Chief Economist of the World Bank
In office
October 2016 – 24 January 2018
President Jim Yong Kim
Preceded by Kaushik Basu
Succeeded by Shanta Devarajan (Acting)
Personal details
Born Paul Michael Romer
(1955-11-06) November 6, 1955[1]
Denver, Colorado, U.S.
Education

Phillips Exeter Academy

University of Chicago (BSc, MA, PhD)
Massachusetts Institute of Technology
Queen's University
Awards Nobel Memorial Prize in Economic Sciences (2018)
Scientific career
Fields Economics
Institutions New York University
Stanford University
UC Berkeley
University of Chicago
University of Rochester
Thesis Dynamic competitive equilibria with externalities, increasing returns and unbounded growth (1983)
Doctoral advisor José Scheinkman
Robert Lucas Jr.
Other academic advisors Russell Davidson
Ivar Ekeland
Doctoral students Sérgio Rebelo
Maurice Kugler
Influences Joseph Schumpeter
Robert Solow

Paul Michael Romer (born November 6, 1955) is an American economist, a pioneer of endogenous growth theory, and a co-recipient of the 2018 Nobel Memorial Prize in Economic Sciences. He 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.[2][3] He had been on leave from his position as professor of economics at the Stern School of Business at New York University.[4]

Prior to New York University, Romer was a professor of economics at the University of Chicago, the University of California, Berkeley, and the Stanford University's Graduate School of Business.[5][6] In addition, Romer was a senior fellow at Stanford's Center for International Development, the Stanford Institute for Economic Policy Research, the Hoover Institution, as well as a fellow at the Center for Global Development.[5][7]

Early life and education

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.[8]

Romer graduated from Phillips Exeter Academy, and earned a B.S. in mathematics in 1977 and a MA in economics in 1978 as well as a Ph.D. in economics in 1983,[1] all from the University of Chicago, after graduate studies at Massachusetts Institute of Technology and Queen's University.[9]

Career

He taught at the University of Rochester, the University of Chicago, the University of California, Berkeley, Stanford University and New York University.[5] He temporarily left academia in 2001 to found Aplia, a company which produces online problem sets for college students; Aplia was purchased in 2007 by Cengage Learning. Romer was named one of America's 25 most influential people by Time magazine in 1997.[10] He was awarded the Horst Claus Recktenwald Prize in Economics in 2002.

He became World Bank Chief Economist in October 2016. He resigned on 24 January 2018,[2][3] following a controversy in which he stated in an interview with The Wall Street Journal on January 12,[11][3] 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,[3] a claim denied by the former World Bank economist responsible for compiling Chile's ranking, Chilean economist Augusto Lopez-Claros.[12][13]

Romer was awarded the Nobel Memorial Prize in Economics in 2018 "for integrating technological innovations into long-run macroeconomic analysis".[14] He shared the 2018 Nobel with William Nordhaus.[15]

Academic contributions

Romer's most important work is in the field of economic growth. Economists studied long-run growth extensively 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. Romer's 1983 dissertation, supervised by José Scheinkman and Robert Lucas Jr., 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. It led to two Journal of Political Economy articles published in 1986 and 1990, respectively, which started endogenous growth theory.

Romer 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

His latest contribution has been in trying to replicate the success of charter cities and make it an engine of economic growth in developing countries. He promoted this idea in a TED talk in 2009.[18] Romer 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.[8]

The government of Honduras has recently considered creating charter cities, though without the oversight of a third-party government, which some argue is neo-colonialism.[8] 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]

Publications

  • "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

References

  1. 1 2 Romer, Paul Michael (1983). Dynamic competitive equilibria with externalities, increasing returns and unbounded growth (Ph.D.). The University of Chicago. OCLC 28795806 – via ProQuest. (Subscription required (help)).
  2. 1 2 "Subscribe to read". Financial Times.
  3. 1 2 3 4 "World Bank economist Paul Romer quits after Chile comments". Reuters. 24 January 2018. Retrieved 8 October 2018.
  4. ↑ "N.Y.U. Lands Top Economist for Cities Project". New York Times. 2011-05-27. Retrieved 2011-05-27.
  5. 1 2 3 "CV (PAUL M. ROMER)" (PDF).
  6. ↑ "Paul Romer". paulromer.net. Retrieved 2018-10-08.
  7. ↑ "Risk and Return". Hoover Digest. No. 2. 1996. Archived from the original on 2012-08-02.
  8. 1 2 3 "The Politically Incorrect Guide to Ending Poverty". The Atlantic. July–August 2010.
  9. ↑ Warsh, David (2007). Knowledge and the Wealth of Nations. New York: Norton. pp. 196–201. ISBN 978-0-393-32988-9.
  10. ↑ "Time's 25 Most Influential Americans". Time Magazine. Time Inc. 1997-04-21. Retrieved 2007-12-21.
  11. ↑ Josh Zumbrun; Ian Talley (12 January 2018). "World Bank Unfairly Influenced Its Own Competitiveness Rankings". Wall Street Journal. Retrieved 8 October 2018.
  12. ↑ "Chile complains of World Bank unfair treatment". BBC. 15 January 2018. Retrieved 8 October 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.
  13. ↑ Oscar Medina; Andrew Rosati (13 January 2018). "World Bank to Probe Chile's Business Ranking After Bias Alleged". Bloomberg. Retrieved 8 October 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.”
  14. ↑ "The Prize in Economic Sciences 2018 Press Release" (PDF). Nobelprize.org. October 8, 2018.
  15. ↑ Appelbaum, Binyamin (October 8, 2018). "2018 Nobel in Economics Awarded to William Nordhaus and Paul Romer". The New York Times.
  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 (2009-07-31). "A Terrible Thing to Waste". The New York Times. Retrieved 2011-10-09.
  18. ↑ Paul Romer: Why the world needs charter cities, TED talk August 2009
  19. ↑ Gunn, Dwyer (2009-09-29). "Can "Charter Cities" Change the World? A Q&A With Paul Romer". The New York Times. Retrieved 2010-05-22.
  20. ↑ "Plan for Charter City to Fight Honduras Poverty Loses Its Initiator". New York Times. 30 September 2012.
Diplomatic posts
Preceded by
Kaushik Basu		 Chief Economist of the World Bank
2016–2018		 Succeeded by
Shanta Devarajan
Acting
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