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STOCKHOLM (AP) — 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.
The academy cited the two "for their empirical research on cause and effect in the macroeconomy."
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.
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