After almost four decades of work exploring the causal relationships between policy decisions and the economy, Sims and Sargent received the Nobel Prize this morning in recognition of their independent, but complementary, research.
While Sargent’s research focused on more long-term economic trends as inflation targets, Sims, the Harold H. Helm ’20 Professor of Economics and Banking, focused more on short-term economic developments. Through statistical analysis, Sims and Sargent investigated whether changes in economic policy cause these developments, or whether policy-makers anticipate these developments when shaping policy.
And although the Nobel Prize website has yet to post details about the research and the winners, congratulations have already begun to flow in from around the world, some more cryptic than others. A personal favorite? “go VIKINGS we fianlly [sic] won.” Surely somebody gets it…
In an interview with the New York Times this morning, Sims said that his research holds real and important implications for the current state of global economic affairs, and recovery from it:
The methods that I’ve used and that Tom has developed are central for finding our way out of this mess.
When pressed for a simple policy solution, though, he hesitated. Whoever finds one of those, it seems, will be in the running for the next Nobel.