Sargent & Sims (RSAS)

The prize in economic sciences 2011 by Royal Swedish Academy of Sciences – The art of distinguishing between cause and effect in the macroeconomy. Thomas J. Sargent and Christopher A. Sims developed impirical methods that can answer some questions. How are GDP and inflation affected by a temporary increase in the interest rate or a tax cut? What happens if a central bank makes a permanent change in its inflation target or a government modifies its objective for budgetary balance? This year’s Laureates in economic sciences, Thomas J. Sargent and Christopher A. Sims, have developed methods for answering these and many other questions regarding the causal relationship between economic policy and different macroeconomic variables such as GDP, inflation, employment and investments. –