Two American Professors Win Nobel for Studies on Effects of Economic Policy
Two American professors will share the twenty eleven Nobel Prize in economics. Staffan Normark, Permanent Secretary of the Royal Swedish Academy of Sciences, announced the winners this week.
STAFFAN NORMARK: "The Royal Swedish Academy of Sciences has decided to award the Sveriges Riksbank Prize in Economic Sciences in memory of Alfred Nobel, 2011, to Professor Thomas J. Sargent at New York University, New York, USA and Professor Christopher A. Sims at Princeton University, Princeton, USA."
Professors Sims and Sargent are both sixty-eight years old. They are being honored for work they did in the nineteen seventies and eighties. But their research has been and remains important to economic policy in many countries. This is especially true in a time when debt in Europe and other problems around the world have hurt economic growth.
The Nobel committee recognized the two professors for their work in showing how policy decisions can affect the health of economies. Both men have studied how actions, like raising interest rates or cutting taxes, affect things like economic growth and inflation.
Professor Sargent studied periods of high inflation in several European countries in the nineteen hundreds. His work suggested that it was important for governments and central banks to keep inflation low and interest rates stable.
Professor Sims suggested a new way of studying economic information over time. He has used a tool of economic analysis, called a vector auto-regression model. Such models provide ways to examine issues like whether growth in the money supply helps to predict inflation.
Christopher Sims told reporters by telephone why his work and the work of Thomas Sargent is so important today.
CHRISTOPHER SIMS: "I think the methods that I have used and Tom has developed are central to finding our way out of this mess. I think they point to a way to try to unravel why our serious problems develop and new research using these methods may help us lead us out of it."
Professors Sargent and Sims will share prize money worth about one point five million dollars. The prize is officially known as the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel. It was first given in nineteen sixty-nine and is the only Nobel Prize not established by Alfred Nobel.