The economists were awarded the Sveriges Riksbank prize for finding answers on how to create long-term sustainable economic growth, the Swedish Nobel society said.
BREAKING NEWS: ⁰The Royal Swedish Academy of Sciences has decided to award the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2018 to William D. Nordhaus and Paul M. Romer. #NobelPrizepic.twitter.com/xUs6iSyI7h
"Their contributions provide us with fundamental insights into the causes and consequences of technological innovation and climate change," it said in a statement.
Paul Romer solved this problem by demonstrating how economic forces govern the willingness of firms to produce new ideas and innovations, the Nobel committee said, adding that Romer’s solution, which was published in 1990, laid the foundation of what is now called endogenous growth theory.
The theory is both conceptual and practical, as it explains how ideas are different to other goods and require specific conditions to thrive in a market, it said.
Nordhaus’ findings deal with interactions between society and nature. Nordhaus decided to work on this topic in the 1970s, as scientists had become increasingly worried about the combustion of fossil fuel resulting in a warmer climate, the Nobel committee informed as it announced the peace prize.
"The contributions of Paul Romer and William Nordhaus are methodological, providing us with fundamental insights into the causes and consequences of technological innovation and climate change," the Nobel society said.