It’s 26 years since Paul Romer shook the discipline of economics with a single research paper. Entitled Endogenous Technological Change, Romer’s article showed how information technology changed something fundamental about our world – moving the focus of economics away from land, labour and capital towards “people, ideas and things”. Last week, a generation later, Romer published what many see as an equally significant intervention. Macroeconomics, he argues, is like a science that has not only stalled for three decades, but has actually gone backwards in its ability to understand reality.
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