US researchers Mr Thomas Sargent and Mr Christopher Sims won the 2011 Nobel Economics Prize here 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.
Mr 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.
Mr 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.
Mr Sargent, born in 1943, is professor of economics and business at New York University, while Mr Sims, 68, is professor of economics and banking and 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.