But adopting the regulatory frameworks on a global scale has proven problematic, and the world's political leaders are failing to meet it, the head of the United Nations said last month.
Romer was awarded for his work on the integration of technological change into forecasting, while Nordhaus received the prize for looking at climate change in economic modelling. The prize was divided between William D. Nordhaus and Paul M. Romer.
Nordhaus is best known for his DICE, Dynamic Integrated model of Climate and the Economy, model.
In this photo taken on April 05, 2000, United States president Bill Clinton sits next to Dr. William D. Nordhaus (R), professor of economics at Yale University, during the morning session of The White House Conference On The New Economy in the East Room of the White House. The climate then affects economic growth, and the cycle repeats. Nordhaus has refined multiple iterations of his model.
Nordhaus looks at ways to integrate the possible impacts of climate change into economic models.
Two American economists have won the 2018 Nobel Economics Prize for work on climate change and a new theory on economic growth. Previous macroeconomic research had emphasized technological innovation as the primary driver of economic growth, but had not modeled how economic decisions and market conditions determine the creation of new technologies. Incentives have to be provided for technology generation: grant of temporary monopoly by way of patents for technology that can be commercialised, state funding of research in universities, to produce ideas of general validity, say, the theory of relativity.
Romer was born in Denver, Colorado. "Graduate work in economics (first at MIT, then Queens University, and the University of Chicago) was a compromise that brought me back toward the policy concerns I had been exposed to as a youth but still left plenty of room for abstract theorizing of the type that attracted me to physics".
"'I didn't ever want it, but, yeah, I'll accept!'" he recalled replying at a separate news conference later at New York University.
"We overslept and when we got up, I got a nice call from my daughter", Nordhaus told Reuters at his home in New Haven, Connecticut. Once you eat a Swedish meatball, for instance, it's gone, noted Per Krusell, a Nobel committee member who is an economist at Sweden's Institute for International Studies. Created in 1968 to mark the tricentenary of the Swedish central bank, the Riksbank, it is the most prestigious prize an economics researcher can win. A total of 81 laureates have been named over the prize's 50 year history.
Only one woman has won the economics prize since 1969, Elinor Ostrom in 2009.