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Paul Romer Joins NYU Stern School of Business to Lead New Urban Systems Project

New York University Stern School of Business today announced that Paul M. Romer will join its faculty in the fall of 2011. Romer will be a professor in the School's Department of Economics and will lead NYU Stern's Urban Systems Project, which the school is launching with a $10 million gift.

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Having a scholar of Paul Romer’s stature join the NYU and Stern faculty is a powerful validation of the ideas that are fueling NYU’s academic momentum.

“I am delighted that Paul is joining the NYU Stern faculty after serving this year as a visiting professor. Paul is a world-renowned economist who will add his expertise on urbanization and development, growth and norms to our distinguished group of economists that includes Thomas Sargent and Nobel Laureates Michael Spence and Robert Engle,” said Peter Henry, Dean of NYU Stern. “Paul's work on urbanization is a perfect fit for Stern," said Dean Peter Henry. "He demonstrates what we expect our students to do: Look for the big challenges, attack them with the methods and mindset of basic science, and create value for business and society."

Romer is widely recognized for his contributions to New Growth Theory, which grew out of his PhD thesis. This theory put new technologies at the center of economic growth, but in his recent work, Romer has emphasized that technologies are only part of the story. To make real progress, societies must also keep discovering and implementing better rules that structure how people work together. Because it is so difficult to reach the broad consensus needed to change the rules in an existing group, societies that lag far behind may want to specify a charter containing major social and economic reforms that will apply on a greenfield site. Then a new "charter city" can emerge as people who support the reforms opt in to the new location.

NYU President John Sexton said, “Having a scholar of Paul Romer’s stature join the NYU and Stern faculty is a powerful validation of the ideas that are fueling NYU’s academic momentum. In addition to our unwavering standards of academic excellence, we are drawn to scholars who recognize the distinctive value that our global network university can provide, and the promise it holds for the future of higher education; and they are, in turn, drawn to NYU. I know that Paul Romer understands and appreciates this aspect of NYU’s academic character, and that his presence and scholarly contributions will strengthen NYU’s global network immeasurably."

More people will move into cities in this century than in all of history to date. To understand this process and consider the alternative paths it could follow, the Urban Systems Project will treat the city as a distinct unit of analysis that is intermediate between the nation and the business. According to Romer, "This kind of perspective encourages us to ask new questions. What would happen if we had more start-up cities? Why do we have schools of urban planning but don't have schools of business planning or national planning?"

Romer's theoretical contributions to New Growth Theory emphasized both technology and education. The practical counterpart to this work came when he started a web software company, Aplia, now part of Cengage Learning. From his experience with publishing firms that were good at producing textbooks but could not make the transition to developing educational software, he concluded that a start-up may be the best way to bring about change when the culture and norms in existing organizations cannot keep up. It was a small leap to the conclusion that new cities could bring the same dynamism to progress for a nation that that new firms bring to progress for an industry. It is a conclusion that the government of Honduras found compelling and is now acting on.

Romer's thoughts about new cities and development were influenced by years of work with Nobel Laureate Michael Spence and Dean Henry. "It will be great to be able to work again at the same school with Mike and Peter," Romer said.

Romer finds business schools exciting because the connection between research and practice is so close. He tells students that they should understand the big challenges facing society because some of them will ultimately influence policy. As an example, he points out that it was a student from Honduras who took a class from Dean Henry at Stanford who first approached him about creating a special reform zone there.

For his work on the economics of ideas, Romer was elected a fellow of the American Academy of Arts and Sciences (2000), and awarded the Horst Claus Recktenwald Prize in Economics (2002). He is a Research Associate of the National Bureau of Economic Research and a Fellow of the Econometric Society.

Romer earned his undergraduate degree in mathematics from the University of Chicago in 1977. He did graduate work in economics at MIT, Queen’s University, and the University of Chicago, and he received his doctoral degree from Chicago in 1983. Prior to joining the faculty at the Stanford Graduate School of Business in 1996, Romer taught at the University of California, Berkeley; the University of Chicago; and the University of Rochester.