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, and that ideas are non-rival. He was named one of America's 25 most influential people by
Time magazine in 1997, 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.
Academia Romer's research on economic growth followed extensive studies of long-run growth during the 1950s and 1960s. 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, and was also the director of the Urbanization Project. Its objective is to assist cities in planning its future developments, specifically improving the safety, health, and mobility of citizens.
Charter cities Romer has attempted to replicate the success of
charter cities and make them an engine of economic growth in developing countries. He coined and popularized the term in a
TED talk in 2009, and he has argued that with better rules and institutions less developed nations can be set on a different and better trajectory for growth. 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.
Impact on Modern Technology and AI Economics Romer’s endogenous growth framework has been recently applied to understand the economic dynamics of artificial intelligence and large scale digital infrastructure. According to the most recent analysis, Romer’s central idea of treating ideas as non-rival goods provides a useful explanation for the rapid expansion of AI investment and its long run economic effects. According to this interpretation, large expenditures on computing hardware, data centers, and model training can be viewed as investments in the accumulation of new ideas and technological capabilities. Because ideas do not diminish with use, these investments produce spillover effects that increase productivity across firms and sectors. The analysis further suggests that while AI model development requires substantial fixed costs, the marginal cost of inference declines sharply with scale. This cost structure mirrors Romer’s emphasis on high initial investment followed by economy-wide benefits, implying that public or shared AI infrastructure could yield significant social returns through the diffusion of new knowledge.
World Bank He became
World Bank Chief Economist in October 2016. He resigned on January 24, 2018, a claim denied by the former World Bank economist responsible for compiling Chile's ranking, Chilean economist Augusto Lopez-Claros.
Nobel Memorial Prize in Economics Romer shared the 2018 Prize with
William Nordhaus. 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." The same day he received the award, Romer married
Caroline Weber, a professor of French Literature at Barnard College. ==Publications==