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María Isabel Rodríguez Tejedo, Professor of Economics at the University of Navarra School

A distinction to works that explain how Economics interacts with nature.

Tue, 09 Oct 2018 10:42:00 +0000 Published in The Economist

William Nordhaus and Paul Romer have been the winners of the 2018 award Nobel Prize for Economics . The two American economists had previously appeared as candidates with possibilities to receive the recognition, which they have finally obtained jointly in the 50th edition of the award awarded by Royal Swedish Academy of Sciences in report of Alfred Nobel.

The Academy has recognized his contribution to "significantly broaden the scope of economic analysis by building models that explain how the market Economics interacts with nature and knowledge".

Although a priori the topics of study of the two laureates (nature and innovation) seem very different, there are also lines of connection between them. The most obvious one is perhaps the importance that their programs of study places on the long deadline and on the importance of less traditional factors in sustaining growth. The classical models at Economics used capital, work and land as the basic determinants of production. Almost everything else falls into a black box that, while important, was difficult to explain and tempting to forget.

The works of Nordhaus and Romer, among other authors, contribute to opening this black box and invite us to think about what we can do today to promote growth. From the academic point of view, both have in common the profound practical effect of their theories and the recognition of the role of governments.

fees sustainable over time

At a time of booming deregulation, both pointed out the importance of good policy making to establish principles that favor the correct economic development . From encouraging research and designing policies that favor technological innovation to establishing prices so that polluting does not come free of charge, the Nobel Prize winners' work invites us as a society to reflect on what we can do at internship to favor fees growth that, in addition to creating employment and improving the standard of living, has the essential quality of being sustainable over time.

Paul Romer has been awarded for his contribution to understanding the role of innovation in economic growth. The New York University professor is considered the founder of the endogenous growth theory at Economics, in which innovation and the application of new ideas can favor economic growth. Although the relationship between technology and growth was firmly established, Romer added to the discussion the consideration that the former appears not exogenously, but as result of the decisions of firms and individuals to devote effort and resources to the production of ideas and innovation. For a short time chief economist of the

World Bank, Romer has also been very active in studying how governments can use the expansion of cities in developing countries development to foster economic and social improvement.

For his part, Nordhaus is also recognized as the main driver of a area in the field of Economics, in this case for his contributions to topic on climate change. The Yale professor was already working on the concept of sustainability in the early 1970s, long before it became fashionable and before society in general realized the importance of not relegating the planet to a minor category called "resources".

Academically, his work on taxing corporate carbon emissions was revolutionary, but also one with great real impact. Numerous countries have introduced tax measures to tax carbon emissions, and many others are considering it as an option to combat climate change.

For their role in highlighting the importance of innovation and the preservation of the environment, Nordhaus and Romer join the laureates of the previous 49 editions of the Nobel Prize at Economics. With this award, the list of laureates who receive the distinction for incorporating aspects traditionally less linked to what might be considered the traditional core of economic science in their analyses grows.