Paul Romer is an economist who is also the pioneer of endogenous growth theory that argues that investment in human capital; innovation and knowledge contribute to economic growth.
Paul Romer of New York University said that on Monday morning "I didn't answer either because I thought it was a spam call". Carbon dioxide, which is emitted when fossil fuels are burned, is a heat-trapping "greenhouse gas" blamed for global warming, and a tax would make polluters pay for the costs imposed on society.
The academy said that the contributions of this year's laureates "are methodological, providing us with fundamental insights into the causes and consequences of technological innovation and climate change".
Yale University's William Nordhaus was named for integrating climate change into long term macroeconomic analysis and New York University's Paul Romer was awarded for factoring technological innovation into macroeconomics.
Between them, the committee said, the two "have 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".
The Dynamic Integrated model of Climate and the Economy (DICE), in its many iterations, has been used to work out just how much it will cost to curb the effects of global warming, and even extrapolate what are the economic benefits of different strategies.
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"I hope the prize will help people see humans are capable of wonderful accomplishments when we try to do something".
Romer resigned from the World Bank in January 2018 after raising questions about how the institution was ranking countries. He told the Associated Press that giving both Romer and Nordhaus the Nobel Prize was a great idea.
The pair will share the nine million Swedish kronor (about $1.01 million or 860,000 euro) prize. Last year's prize went to an American, Richard Thaler of the University of Chicago, for work on how human irrationality affects economic theory.
Two researchers at American universities have been awarded the Nobel Prize for economics.
That award was postponed by a year for the first time in 70 years over a rape scandal that came to light as part of the #MeToo movement.
Though the prize is not technically considered a Nobel Prize, as it was not established in the will of Alfred Nobel, it is regarded to be equivalent to those prizes (Chemistry, Literature, Peace, Physics, and Medicine) in the field of economics.
The peace prize, which was announced in Oslo on October 5, was awarded to Denis Mukwege, a gynecologist from the Democratic Republic of Congo, and Nadia Murad, an activist and victim of war crimes.