Americans Sargent, Sims share economics Nobel

STOCKHOLM — Americans Thomas Sargent and Christopher Sims won the Nobel economics prize on Monday for research that sheds light on the cause-and-effect relationship between the economy and policy instruments such as interest rates and government spending.

Sargent and Sims — both 68 — carried out their research independently in the 1970s and '80s, but it is highly relevant today as world governments and central banks seek ways to steer their economies away from another recession.

The Royal Swedish Academy of Sciences said the winners have developed methods for answering questions such as how economic growth and inflation are affected by a temporary increase in the interest rate or a tax cut.

"Today, the methods developed by Sargent and Sims are essential tools in macroeconomic analysis," the academy said in its citation.

Sargent is a professor at New York University, and Sims is a professor at Princeton University.

Sims told a news conference in Stockholm by telephone that he was sleeping when he got the call from the prize committee and that he had not expected to win.

"Actually, at first we were called twice and my wife couldn't find the talk button on the phone so we went back to sleep," he said.

Sims said there was no easy way in which his work could help resolve the current financial turmoil.

"I don't have any simple answer, but I think the methods that I have used and Tom has developed are central to finding our way out of this mess," he added. "I think they point a way to try to unravel why our serious problems develop and new research using these methods may help us lead us out of it."

Asked how he would invest his half of the 10 million kronor ($1.5 million) award given the turbulence of today's financial markets, Sims said: "First thing I'm gonna do is keep it in cash for a while and think."

Sargent told The Associated Press he was surprised by the award, and he hadn't yet thought of how to celebrate it.

"I'm just going to teach my classes. I teach two classes today. I don't know if that's a celebration," he said by phone, preparing his notes for class on a train about to depart from New York to Princeton, where he is teaching macroeconomics this semester.

He didn't think the Nobel would change his life. "I hope not at all. I'm going to work and keep doing what I do. I like what I do," he said.