Thomas Sargent of New York University and Christopher Sims of Princeton have been jointly awarded the 2011 Nobel Prize in Economic Sciences for their studies on "cause and effect in the macroeconomy".
AFP - Christopher Sims and Thomas Sargent are friendly rivals whose careers have tracked each other's from the time they were Harvard doctoral students to Monday's announcement that they had both won the 2011 Nobel Economics Prize.
As it happened, Sims and Sargent, both 68, were teaching a class together at Princeton University when they learned they were being honored for their work analyzing the causal relationships between economic activity and policy actions.
"I couldn't be happier to be getting this prize, especially with Tom, whom I've known for many years," Sims said in a joint news conference with Sargent at Princeton, hours before their joint class, "Advanced Macroeconomic Theory I."
Sargent joked that the two had longstanding disagreements over the years, revealing that when Sims would read one of his papers, "his comments start like this -- 'this paper is deeply flawed.'"
"Chris isn't always the easiest person to understand" but "he's been extremely generous in commenting on papers," Sargent said, who is a professor at New York University.
Sims said that "we've had a series of continuing arguments, some of which are still going on," but that both work on "an approach to economics that recognizes the uncertainty that surrounds our theories."
Sims, an economics professor at Princeton, has conducted research with Ben Bernanke, the current Federal Reserve chairman who also was a professor at Princeton.
He said he disagrees with the popular notion that scientific macroeconomics created the current economic woes.
"My view is that technical, careful, statistically based macroeconomics is our hope for getting out of our difficulties," he said.
Mark Watson, acting chair of Princeton's economics department, said of Sims and Sargent, "They've changed macroeconomics in the biggest way possible, and allowed us to credibly answer questions that we just couldn't have answered before."
Sims said he and his wife missed the first call from the Nobel committee while they were sleeping.
"It was 6:15 am and dark and the phone rang. She fumbled with the phone and could not find the talk button. We decided it was probably a wrong number," he said.
He said he suspected it was the Nobel panel but that his caller ID identified the call as coming from Texas, and they decided it was a prank.
But the committee called back and his wife said "'if it was a prank, they were doing a pretty good Swedish accent.'"
Sims said earlier his work tries to "untangle" the relationship between policy actions from central banks and the rate of inflation.
"These methods have been used in many countries, and one of the things that have given them credibility is they tend to give consistent results," he said.
"The main contribution of this work is to provide a way to untangle the relationship between interest rates and inflation, so we can see what the effect of interest-rate policy changes are on the price level and inflation, and separate that from the reverse causality that makes central banks react to inflation by changing interest rates."
Sims is Princeton's Harold H. Helm '20 Professor of Economics and Banking, and has been a faculty member at the New Jersey university since 1999.
"I wasn't surprised when Chris Sims won, but I was surprised that I won," Sargent said in an interview released by Princeton after the announcement.
He added that, upon telling his wife the news, she "told me to bring a tie, which wasn't very helpful -- but I guess it's useful.
Date created : 2011-10-10