The 2018 prize has been awarded to the US's William D. Nordhaus and Paul M. Romer for including climate change and technological innovation in longterm economic theory and furthering research on sustainable growth.
The Royal Swedish Academy of Sciences in Stockholm has given the 50th Nobel Prize in Economic Sciences to William D. Nordhaus and Paul M. Romer, both from the US, for "integrating climate change and technological innovations into long-run macroeconomic analysis."
The two economists will share the 9 million Swedish kronor ($1.01 million, €860,000) prize.
Nordhaus, from Yale University, and Romer, from New York University's Stern School of Business, were honored for their contribution to what the academy called "some of our time's most fundamental and pressing issues: longterm sustainable growth in the global economy and the welfare of the world's population."
'Interplay' of economy and climate
Nordhaus first came up with a model that helps researchers analyze the "interplay of the economy and the climate," pointing out that the quantitative model is now widely used to ascertain the impact of policy interventions, like carbon taxes.
Nordhaus also showed how economic activity interacts with chemistry and physics to "produce climate change," the Academy said.
Romer, who served as chief economist at the World Bank until January 2018, has helped shape the endogenous (from within a system) growth theory, which states that productivity gains can be tied directly to speedy innovation and more investments in workers. Its supporters encourage governments and the private sector to foster innovation and incentives for increased creativity.
Prize not part of Nobel's will
The Nobel Economics Prize was not part of the original line-up of awards as envisaged by Alfred Nobel and is therefore officially known as the Nobel Memorial Prize in Economic Sciences.
It has been issued by Sweden's central bank, the Riksbank, since 1969. Its laureates primarily focus on macroeconomic research.
Last year, US economist Richard H. Thaler received the award for his work in behavioral economics, specifically individual decision-making and how irrational decisions can trip up economic theory.
The Economics Prize wraps up this year's Nobel awards season, notable for the absence of the literature prize for the first time in 70 years after Jean-Claude Arnault, who was affiliated with the Swedish Academy, was convicted of rape.