Thomas Sargent and Christopher Sims won the Nobel economics prize on Monday “for their empirical research on cause and effect in the macroeconomy,” the Royal Swedish Academy of Sciences said.
The prize committee said the winners have developed methods for answering questions such as how economic growth and inflation are affected by a temporary increase in the interest rate or a tax cut. Sargent and Sims — both 68 — carried out their research independently in the 1970s and ’80s.
“Today, the methods developed by Sargent and Sims are essential tools in macroeconomic analysis,” the citation said.
Sargent is a professor at New York University, and Sims is a professor at Princeton University.