Professor Romer from New York University's Stern School of Business demonstrated how knowledge can function as a driver of long term economic growth and showed "how economic forces govern the willingness of firms" to produce new ideas and innovations. Both are macroeconomists dealing with long-run dynamics-big questions of what spurs economic growth, the importance of sustainable growth, and how to tackle climate change. 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.
"We are actually going backwards in the United States with the disastrous policies of the Trump administration", the 77-year-old added.
Many economists have since endorsed the concept of taxing carbon and using this financial lever to influence societal behavior.
Romer stressed the importance of facts and science in pushing progress forward, saying in the press conference that science is the most important thing that humans have ever invented.
One of Romer's insights was that ideas differ from other goods or services. Examples include subsidies for research and development, and patent policies that strike a balance between letting inventors profit from their breakthroughs and allowing others to put those innovations to work. "Either I eat an apple of you eat the apple, but we can all use calculus", he said. Government policies, he found, are vital.
By contrast, an idea - say, a recipe for Swedish meatballs - can be shared and used over and over again, delivering continual economic benefits.
He's also studied wage and price behavior, health economics, augmented national accounting, the political business cycle, productivity, and the "new economy".
Paul Michael Romer, who is one of this year's recipient of the Nobel Prize for Economics is a fan of the Aadhaar system.
Romer teaches economics at New York University, where he founded the Stern Urbanization Project, which researches how policymakers can harness the rapid growth of cities to create economic opportunity and undertake systemic social reform.
The Nobel Peace Prize was awarded Friday to Nadia Murad, a Yazidi human rights activist and survivor of sexual slavery by Islamic State in Iraq, and Denis Mukwege, a gynecologist treating victims of sexual violence in the Democratic Republic of Congo.
Previous year the prize went to U.S. economist Richard Thaler, a co-founder of the so-called "nudge" theory, which demonstrates how people can be persuaded to make decisions that leave them healthier and happier.
Romer is now on leave from Stern, which he joined in 2010, and in the past taught undergraduates at NYU's Shanghai campus. Also among the 2018 laureates were Donna Strickland, who received her doctorate in optics from Rochester in 1989 and is now a professor at the University of Waterloo in Ontario, and Gérard Mourou, a former engineering professor and scientist at Rochester's Laboratory for Laser Energetics and currently a professor at the École Polytechnique in France.