Monday, October 10, 2011

Thomas Sargent & Christopher Sims win the Nobel Prize

Thomas J. Sargent of New York University and Christopher Sims of Princeton University won the Sveriges Riksbank Prize in Economic Sciences in the Memory of Alfred Nobel.  They won for "rational expectations," but the official reason given was for "their empirical research on cause and effect in the macroeconomy."

Sveriges Riksbank in Stockholm (photo: Björn Sahlberg)

The idea of "rational expectations" first  won the Nobel Prize with Robert Lucas, Jr. in 1995.  Its exciting to see more proponents of it get the award.  One of the earliest and important anthologies of the idea was published in 1981 and edited by Lucas and Sargent, Rational Expectations and Econometric Practices.  It includes most of the important essays on the subject by Sargent, Sims, Lucas, Robert Barro, Bennett McCallum, Lars Hansen, Stanley Fischer, Gregory Chow, and others.  Another book that I own by Sargent is titled Rational Expectations and Inflation.  I think it's also a bit exciting that the Swedish central bank (Sveriges Riksbank) is concerned about expectations and inflation at a time just after they reduced lending rates into negative territory, although I'm not sure how much the prize and the bank actually co-mingle.

I must admit that I am not as familiar with Christopher Sims, although I have seen his name around the citations and speaker lists.  According to Microsoft Academic Search, his most cited article (by far) is "Macro-Economics and Reality" which is about to Vector AutoRegression (VAR) techniques.  This should also be considered a win for the Univeristy of Minnesota economics department.  While neither professor is currently there, both did some of their most crucial work on rational expectations there.

These names were, at first, a bit suprising to me.  They made my short list, albeit the long version of my short list.  They did not attract any interest from my short list when I initiated my poll.  I must admit that I'm very happy that some more rational expectations economists are winning, but I'm a bit shocked that Robert Barro didn't win along with them.  I hope the recent controversy didn't prevent him from being added, although I'd be suprised if that was the deciding factor.

News Conference at Princeton University with Thomas Sargent & Christopher Sims

You can offer the candidates your congratulations via the Nobel website.

No comments:

Post a Comment