Two university professors won the Nobel Memorial Prize in Economic Sciences Monday.
Christopher A. Sims of Princeton University, 68, and Thomas J. Sargent of New York University, also 68, won their awards for their separate research. They both examined the cause and effect relationships between economic policies enacted by governments and the larger economy as a whole. The two professors will split the $1.5 million award.
The Royal Swedish Academy of Sciences, who announced the prize, said that the professors work has been adopted by experts and politicians all over the world.
“”The laureates’ foremost contribution has been to show that causal macroeconomic relationships can indeed be analyzed using historical data, even in cases with two-way relationships,” said the Nobel committee.
One of the biggest challenges the professors faced in their work was the “chicken or the egg problem”- does economic policy affect the economy or does the economy influence economic policy? This problem is particularly difficult to solve as economic experiments are difficult to perform in the real world.
The Nobel committee said that the professors’ research could help answer questions including “How are gross domestic product and inflation affected by a temporary interest-rate hike or a tax cut?” and “What happens if a central bank makes a permanent change in its inflation target or a government changes its goals in budget balancing?”
The researchers’ work is particularly relevant now during the United States and Europe’s current economic struggles.
“Maybe the president and the rest of our government should be looking into getting these professors to help to fix the economy instead of standing around arguing,” said junior Journalism student Mike Gasper. “I mean, their reasons for winning the award relate directly to America’s economic problems right now.
The dark humor in the American’s receiving awards for their economic research during our country’s historically significant struggles did not go unnoticed.
“While I think the situation is ironic, it makes sense that they would receive the award since our economy is a main focus for Americans and people all over the world. This probably is why their research was considered to be so important and worthy of this award,” said junior Engineering student David Rosen.