US researchers Thomas Sargent and Christopher Sims won this year’s Nobel Prize in Economics yesterday for their work on macroeconomics and government economic policymaking, the Nobel jury said.
This year’s laureates “have developed methods for answering ... questions regarding the causal relationship between economic policy and different macroeconomic variables, such as GDP, inflation, employment and investments,” the jury said.
Sargent worked on structural macroeconomics, which can be used to analyze permanent changes in economic policy.
“This method can be applied to study macroeconomic relations when households and firms adjust their expectations concurrently with economic developments,” the jury said.
Meanwhile, Sims’ method is based on “vector autoregression, and shows how the economy is affected by temporary changes in economic policy and other factors,” such as a central bank rate hike.
While the pair worked separately, their work is complementary and “has been adopted by researchers and policymakers around the world ... [and their methods] are essential tools in macroeconomic analysis,” it said.
Sargent, born in 1943, is professor of economics and business at New York University, while Sims, 68, is professor of economics and banking at Princeton University.
The economics prize is the only one of the six Nobels not originally included in the 1895 will of the prizes’ creator, Swedish industrialist Alfred Nobel.
It was created by the Swedish central bank, the Riksbank, in 1968 to commemorate its tricentennial and was first handed out in 1969.
The 10 million Swedish kronor (US$1.48 million) prize is funded by the Riksbank, unlike the other prizes which are financed by the Nobel Foundation.
The two most-watched prizes, those for literature and peace, were announced last week.
Swedish poet Tomas Transtroemer won the Nobel Prize in Literature on Thursday, while on Friday the Nobel Peace Prize was awarded to Liberian President Ellen Johnson Sirleaf and her compatriot, peace activist Leymah Gbowee, as well as Yemeni blogger and activist Tawakkul Karman, in a nod to women’s empowerment.
All of the Nobel laureates will receive their prizes at gala ceremonies in Oslo and Stockholm on Dec. 10, the anniversary of the death of Alfred Nobel.
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