Posted by: mulrickillion | October 11, 2011

2 American Professors Awarded Nobel in Economic Science

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Thomas Sargent, left, and Christopher Sims celebrated Monday. Stan Honda/Agence France-Presse — Getty Images’.

By Catherine Rampell, Oct 10, 2011 — The Nobel in economic science was awarded on Monday to Thomas J. Sargent of New York University and Christopher A. Sims of Princeton University for their research on the cause and effect of government policies on the broader economy, a major concern of countries still struggling to address the aftermath of the recent financial crisis.

Back in the 1970s, Dr. Sargent and Dr. Sims were interested in figuring out how a new policy, like a tax cut or an interest rate increase, might affect the economy. But economists cannot run controlled experiments in real life to see what happens when a policy is executed and compare the results to when it is not. Instead, they have to study whatever history is available to them, with all the complicated conditions that happened to coincide with the policy change.

Dr. Sargent and Dr. Sims developed statistical methods to organize historical data and disentangle the many variables.

Their new methodologies are used to figure out whether a policy change that happened in the past affected the economy or whether it was made in anticipation of events that policy makers thought would happen later. The methods also help decipher how regular people’s expectations for government policies can affect their behavior. . . .

2 American Professors Awarded Nobel in Economic Science – NYTimes.com

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