I’m very pleased to host a guest post by Chad Jones celebrating the 25th anniversary of Romer (1990). Enjoy!
If you add one computer, you make one worker more productive. If you add a new idea — think of the the computer code for the first spreadsheet or word processor or even the internet itself — you can make any number of workers more productive.
The essential contribution of Romer (1990) is its clear understanding of the economics of ideas and how the discovery of new ideas lies at the heart of economic growth. The history behind that paper is fascinating. Romer had been working on growth for around a decade. The words in his 1983 dissertation and in Romer (1986) grapple with the topic and suggest that knowledge and ideas are important to growth. And of course at some level, everyone knew that this must be true (and…
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