Thomas A. Sargent, 68, was awarded Monday the Nobel Prize in Economics, which he shared with Princeton economist Christopher Sims for their joint work on the cause-and-effect relationship between policy and the economy, reported the Financial Times.
Sargent, a professor at New York University, focused his award-winning research on longer-term structural analysis of the economy, according to the New York Times. Using historical data, Sargent looked at issues like a new inflation target, and conducted experiments to discover how these types of policy changes affect the economy long term.
According to the Nobel Prize website on the winners, Sargent has attempted to answer questions like these: "Sargent’s analysis deals with the effects of such systematic policy rules and the consequences of changes in the rules for policy. Expectations are an integral part of this analytical approach. Is it possible to determine whether changes in the economy depend on shifts in economic policy? Could such changes instead depend on fluctuations in the overall economy that prompt decision-makers to adopt a different policy? Sargent has examined these issues using a three-step method."
The Washington Post reports that Sargent has spoken out about President Obama's economic decisions, saying in a 2010 interview with the Minneapolis Fed that research points to the fact that banks often take bigger risks when backed with government safeguards. Still, Sims reportedly said ""The methods that I've used, and Tom and I have developed are central to finding our way out of this mess," according to the Wall Street Journal.
Sims and Sarget completed their research independent of each other, but the prize committee said their work was complementary, reports the Times.
According to the New York University website, Sargent is a William R. Berkley professor of economics and business, joining the NYU Stern School of Business in 2002. He has also been a member of the Hoover Institution since 1987. Before NYU, Sargent taught at the University of Minnesota, University of Chicago and Stanford University in California.
A former captain and lieutenant in the U.S. Army, Sargent graduated from University of California, Berkeley and earned his PhD from Harvard University in 1968. His Nobel Prize will sit amongst the Nemmers Prize in Economics he won in 1997. Like Sims, he has also been president of the American Economic Assocation, and a member of the National Academy of Sciences and the American Academy of Arts and Sciences.
Previous winners of the illustrious prize have included Paul Krugman, Joseph Stiglitz, and last year, Peter A. Diamond, Dale T. Mortensen, Christopher A. Pissarides won for their "analysis of markets with search frictions," reports the Wall Street Journal.
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