Two U.S. economists have won this year’s Nobel Prize in Economic Sciences. Thomas Sargent and Christopher Sims both earned their Ph.D.’s at Harvard University in 1968, and then worked independently on how government policy affects the economy and vice versa.
The Nobel Prize Committee is recognizing “their empirical research on cause and effect in the macroeconomy.”
Sargent, who now teaches at New York University, showed how structural macroeconomics could be used to analyze major changes in economic policy, for example how people and businesses make decisions after significant economic events.
Sims, who now teaches at Princeton, found a better way to show, for example, how changing the interest rate affects the economy over time.
The research tools Sargent and Sims developed during the 1970s and '80s are used by policymakers struggling to encourage economic growth today.
This program aired on October 10, 2011. The audio for this program is not available.