[News Figures] Professor Romer Criticized, Saying "Raising Interest Rates Further Is Crazy"

Paul Romer, a professor of business administration at Boston College who harshly criticized the U.S. central bank, the Federal Reserve (Fed), by saying it would be crazy to raise the benchmark interest rate further, is a pioneer of endogenous growth theory. He was awarded the 2018 Nobel Prize in Economics for his research on the impact of technological innovation on the macroeconomy based on endogenous growth theory. Earlier, in 1997, he was selected as one of the "25 Most Influential People in America" by Time magazine, and in 2010, he was also named one of the world's 100 leading thinkers by Foreign Policy.

Endogenous growth theory centers on the idea that the core drivers of economic growth?technology, knowledge, and creative ideas?are not determined externally but are generated internally by economic agents motivated by profit, which are then invested in production activities, becoming the engine of economic growth. In other words, sustained growth is possible when endogenous growth of new knowledge and technological innovation occurs through research and development (R&D).

Based on endogenous growth theory, Professor Romer has focused on economic growth models for developing countries and proposed the concept of "Charter Cities," a type of special economic zone. Charter Cities are urban development projects aimed at providing jobs to millions through urbanization of specific areas and promoting economic growth in the respective countries. His vision was that developing countries could address rural poverty through urbanization.

Professor Romer graduated with a degree in physics from the University of Chicago and earned his Ph.D. in economics from the same university. He has served as a professor at the University of Chicago, the University of California, Berkeley, and Stanford University. From 2016 to 2017, he also worked as a chief economist at the World Bank. During his tenure at the World Bank, Romer sparked controversy by raising concerns about manipulation in the Ease of Doing Business rankings. He suggested that Chile’s sharp drop in ranking was due to changes in the evaluation method rather than the business environment itself, implying possible manipulation of the rankings. As the controversy grew, he clarified that his remarks were misunderstood, but he resigned after only 15 months, not completing his term which was supposed to last until September 2020.

Meanwhile, on the 26th (local time), Professor Romer emphasized on Bloomberg Television that "there is a theory that the economy must slow down to reduce inflation, but that is not the case now," and warned, "We should not be confused by some theories that have been proven wrong."