Yesterday the 2011 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to Thomas Sargent and Christopher Sims. In the WSJ, David Henderson comments:
On Monday the Nobel Committee announced the winners of the 2011 Nobel Prize in economics: Thomas J. Sargent of New York University and Stanford University’s Hoover Institution, and Christopher A. Sims of Princeton University. The award was given for “their empirical research on cause and effect in the macroeconomy.”
The Swedish economists announcing the award emphasized, correctly, the importance of Messrs. Sargent’s and Sims’s thinking about the role people’s expectations play in economic decision making and the larger economy. But what they failed to mention is that their work has also offered empirical evidence that the school of thought known as Keynesian economics—which believes that government can turn a flagging economy around with the right combination of fiscal “stimulus” (generally government spending) and monetary policy—is fallible.
For more on the latest Nobel laureates, Tyler Cowen comments on the work of Sargent and Sims at Marginal Revolution. And here’s more from Alex Tabarrok and Steve Hanke.