Paul M. Romer
Pre-reading
Paul M. Romer (1955- ) is an American economist and entrepreneur, currently the professor of economics at the Stern School of Business at New York University. He is a pioneer of endogenous growth theory. Romer earned a B.S. in physics in 1977 and a Ph.D. in economics in 1983, both from the University of Chicago. He taught at the University of California at Berkeley, the University of Chicago, and the University of Rochester. He was named one of America’s 25 most influential people by Time Magazine in 1997. Romer was awarded the Horst Claus Recktenwald Prize in Economics in 2002. He temporarily left academia, focusing his energy on his 2001 start-up company Aplia, which was purchased in 2007 by Cengage Learning.
Romer’s most important work is in the field of economic growth. His articles published in 1986 and 1990 amounted to constructing mathematical representations of economies in which technological change is the result of the intentional actions of people, such as research and development. This started endogenous growth theory.
The following passage is the epilogue from the latest Advanced Macroeconomics.
Prompts for Your Reading
1.Do you know anything about the 2008 financial crisis, or the financial tsunami? If not, read something about this crisis before you start reading the passage.
2.Have you heard of John Maynard Keynes? What are his main achievements?
3.Nearly all discussions of macroeconomic policy must begin with Keynes. Does Romer do the same in this passage? Why or why not?
4.What are the three leading explanations of the Great Moderation?
5.Romer claims that “the events of the past few years were a profound shock not just to the macro-economy, but also to the field of macroeconomics.” Can you find details supporting this claim in the passage?
6.Romer points out seriously the vulnerability of financial markets and the limits to the forces bringing asset prices in line with fundamentals. How does he elaborate it?