Paul Romer

Paul Michael Romer (born November 7, 1955) is an American economist, entrepreneur, and activist. He is currently Chief Economist and Senior Vice President of the World Bank. He is on leave from his position as professor of economics at the Stern School of Business at New York University. Prior to that, Romer was a professor of economics at Stanford University's Graduate School of Business and a senior fellow at Stanford's Center for International Development, the Stanford Institute for Economic Policy Research, and the Hoover Institution, as well as a fellow at the Center for Global Development. He is a pioneer of endogenous growth theory. He temporarily left academia, focusing his energy on his 2001 start-up company Aplia which developed online homework problem sets for college students; Aplia was purchased in 2007 by Cengage Learning.
Romer earned a B.S. in mathematics in 1977 and a Ph.D. in economics in 1983, both from the University of Chicago. He taught at the University of California at Berkeley, the University of Chicago, and the University of Rochester. He was named one of America's 25 most influential people by Time magazine in 1997. Romer was awarded the Horst Claus Recktenwald Prize in Economics in 2002. He is the son of former Colorado governor Roy Romer. On July 18, 2016, Romer announced on his blog that he has accepted a position as Chief Economist at the World Bank.

Romer's most important work is in the field of economic growth. Economists studied long-run growth extensively 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. 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 sounding horn by economists and consultants looking for a positive take away from the economic downturn of 2007–2009.

“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.”

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. Romer has argued that with better rules and institutions, undeveloped 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. The blogger Mencius Moldbug has criticized this idea, and in particular a TED Talk Romer gave about it, as merely a copy of classical colonialism.

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. 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.

Romer has influenced the "Peoples' Capitalism" concept put forth by James S. Albus—arguably a form of basic income guarantee.

• "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