STOCKHOLM: US researchers Thomas Sargent and Christopher Sims won the 2011 Nobel Economics Prize on Monday for their work on macro-economics 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 macro-economic variables, such as GDP, inflation, employment and investments," the jury said.
Sargent worked on structural macro-economics, which can be used to analyse permanent changes in economic policy. "This method can be applied to study macro-economic relations when households and firms adjust their expectations concurrently with economic developments," the jury said.
Sims' method is meanwhile 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 macro-economic 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 and Princeton University. One of the 2011 Nobel Economics Prize winners said on Monday his work tries to 'untangle' the relationship between central bank actions and the rate of inflation.
Princeton University economist Christopher Sims, co-winner with New York University's Thomas Sargent, said he has developed statistical tools that have been useful in unraveling the effect of monetary policy on the economy. "These methods have been used in many countries, and one of the things that have given them credibility is they tend to give consistent results," he said, adding that the main contribution of this work is to provide a way to untangle the relationship between interest rates and inflation, so we can see what the effect of interest-rate policy changes are on the price level and inflation, and separate that from the reverse causality that makes central banks react to inflation by changing interest rates.
"I was very surprised," Sims said of receiving the notification of the award. "We jumped right out of bed, because we imagined it would be a very busy morning," he said, adding that at first his wife couldn't find the talk button on the phone when the Nobel representatives contacted him 'so they called back 10 minutes later'.
Sims, who also has a PhD from Harvard, is Princeton's Harold H Helm '20 Professor of Economics and Banking, and has been a faculty member at the New Jersey university since 1999.Sargent is the William R Berkley Professor of Economics and Business at New York University and the Donald L Lucas Professor in Economics, Emeritus, at Stanford University. He is also a senior fellow at the Hoover Institution at Stanford. -- AFP
Prize in Economic Sciences
KATHMANDU: The economics prize is not among the original awards established by Swedish industrialist Alfred Nobel in his 1895 will, but was created later. In 1968, Sveriges Riksbank (Sweden's central bank) established the Prize in Economic Sciences in Memory of Alfred Nobel, founder of the Nobel Prize. The Prize is based on a donation received by the Foundation in 1968 from Sveriges Riksbank on the occasion of the Bank's 300th anniversary. The first Prize in Economic Sciences was awarded to Ragnar Frisch and Jan Tinbergen in 1969. The Prize in Economic Sciences in Memory of Alfred Nobel is awarded by the Royal Swedish Academy of Sciences, Stockholm, Sweden, according to the same principles as for the Nobel Prizes that have been awarded since 1901.
The past winners
2011: Thomas Sargent and Christopher Sims (US)
2010: Peter Diamond and Dale Mortensen (US) and Christopher Pissarides (Cyprus-Britain)2009: Elinor Ostrom and Oliver Williamson (US)
2008: Paul Krugman (US)
2007: Leonid Hurwicz, Eric Maskin and Roger Myerson (US)
2006: Edmund S. Phelps (US)
2005: Thomas C Schelling (US), Robert J Aumann (US-Israel)
2004: Finn Kydland (Norway), Edward Prescott (US)
2003: Robert F Engle (US), Clive WJ Granger (Britain)
2002: Daniel Kahneman (Israel-US) and Vernon L Smith (US)
2001: George Akerlof (US), A Michael Spence (US), Joseph Stiglitz (US)
2000: James Heckman (US), Daniel McFadden (US)
1999: Robert Mundell (Canada)
1998: Amartya Sen (India)
1997: Robert Merton (US), Myron Scholes (US)
1996: James Mirrlees (Britain), William Vickrey (US)
1995: Robert Lucas Jr (US)
1994: John Harsanyi (US), John Nash (US), Reinhard Selten (Germany)
1993: Robert Fogel (US), Douglass North (US)
1992: Gary Becker (US)
1991: Ronald Coase (Britain)
1990: Harry Markowitz (US), Merton Miller (US), William Sharpe (US)
1989: Trygve Haavelmo (Norway)
1988: Maurice Allais (France)
1987: Robert Solow (US)
1986: James Buchanan (US)
1985: Franco Modigliani (US)
1984: Richard Stone (Britain)
1983: Gerard Debreu (US)
1982: George Stigler (US)
1981: James Tobin (US)
1980: Lawrence Klein (US)
1979: Theodore Schultz (US), Arthur Lewis (Britain)
1978: Herbert Simon (US)
1977: Bertil Ohlin (Sweden), James Meade (Britain)
1976: Milton Friedman (US)
1975: Leonid Kantorovich (Soviet Union), Tjalling Koopmans (US)
1974: Gunnar Myrdal (Sweden), Friedrich von Hayek (Britain)
1973: Vassily Leontief (US)
1972: John Hicks (Britain), Kenneth Arrow (US)
1971: Simon Kuznets (US)
1970: Paul Samuelson (US)
1969: Ragnar Frisch (Norway), Jan Tinbergen (Netherlands)