Americans Thomas Sargent and Christopher Sims have won the 2011 Nobel Memorial Prize in Economic Sciences. The Royal Swedish Academy of Sciences cited the researchers "for their empirical research on cause and effect in the macroeconomy."
How are GDP and inflation affected by a temporary increase in the interest rate or a tax cut? What happens if a central bank makes a permanent change in its inflation target or a government modifies its objective for budgetary balance? This year's laureates in economic sciences have developed methods for answering these and many of other questions.
The laureates' seminal work during the 1970s and 1980s has been adopted by both researchers and policymakers throughout the world. Today, the methods developed by Sargent and Sims are essential tools in macroeconomic analysis.
This program aired on October 10, 2011. The audio for this program is not available.