This year's Nobel Prize in Economic Sciences was awarded to U.S. economists William Nordhaus and Paul Romer for their work on integrating innovation and climate with economic growth.

Nordhaus, a Yale University economist who was president of the AEA in 2014, was named Monday morning along with NYU professor Romer as the 2018 recipients of the award from The Royal Swedish Academy of Sciences. Romer was a member of the AEA Executive Committee from 1997-1999.

William Nordhaus

Paul Romer

In its announcement, the Academy lauded both men for having “designed methods for addressing some of our time’s most basic and pressing questions about how we create long-term sustained and sustainable economic growth.”

Nordhaus’ research deals with interactions between society and nature. In the mid-1990s, he became the first person to create an integrated assessment model, which describes the interplay between the economy and climate. The model is now widely used to simulate how the economy and climate co-evolve. His paper projecting climate change in an era of minimal policy interventions appeared in the August issue of American Economic Journal: Economic Policy and was featured in a chart of the week.

Romer’s work has focused on how knowledge can function as a driver of long-term economic growth. He laid the foundation for endogenous growth theory, which explains how ideas are different to other goods and require specific conditions to thrive in a market.

“Romer’s theory has generated vast amounts of new research into the regulations and policies that encourage new ideas and long-term prosperity,” the Academy said.

The full announcement can be read here: https://www.nobelprize.org/uploads/2018/10/press-economicsciences2018.pdf