Nordhaus, 77, was specifically honoured for "integrating climate change into long-run macroeconomic analysis".
Hours before the award, the United Nations panel on climate change said society would have to radically alter the way it consumes energy, travels and builds to avoid the worst effects of global warming. "The main recipe.is to make sure governments, corporations and households face a high price on their carbon emissions".
According to the Nobel Prize Committee in Stockholm, the recipients came up with methodological insights into the causes and consequences of technological innovation and climate change. His work is fundamental to endogenous growth theory, which holds that investments in human capital, innovation and knowledge are significant contributors to economic growth.
Romer was able to apply his theory as Chief Economist and Senior Vice President of the World Bank, a position that he held from October 2016 to January of this year.
"Aadhaar "[is] the basis for all kinds of connections that involve things like financial transactions", the American economist told Bloomberg.
Interest rates remain at or close to record lows in many major economies, including Sweden, where they have languished below zero since early 2015.
Last week, after the prizes for medicine, physics and chemistry were announced, the most highly-anticipated Nobel, that for peace, went to Yazidi women's campaigner Nadia Murad and Congolese doctor Denis Mukwege for their work in fighting sexual violence in conflicts around the world.
They will share the 9-million-kronor ($1.01 million) prize. Five people have won the Nobel Prize in economic sciences while serving as members of the MIT faculty; another 11 MIT alumni, including Nordhaus, have won the prize.