December 18, 2012
October 10, 2011

Thomas J. Sargent and Christopher A. Sims share Economics Nobel

The 2011 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was jointly awarded today to Thomas J. Sargent and Christopher A. Sims "for their empirical research on cause and effect in the macroeconomy".

Thomas J. Sargent, currently a professor at New York University, is a macroeconomic theorist who has contributed substantially to the fields of pure macroeconomic theory, monetary theory, and economic history. He was one of the leaders of the “rational expectations revolution” in macroeconomics and his work helped to establish the New Classical School of economics. More recently, Sargent has also developed economic models that incorporate learning and bounded rationality. Here is Tyler Cowen explaining Sargent’s contributions to economics.

Christopher A. Sims, currently a professor at Princeton University, is a macroeconometrician who led the profession in applying the technique of Vector Auto-Regression (VAR) to empirical macroeconomics. He also pioneered the use of impulse response functions in macroeconomics. Here is Tyler Cowen explaining Sims’s contributions to economics.

Although it is sometimes a mistake to interpret the Sveriges Riksbank Prize through a political lens, in my opinion today’s award represents a partial vindication of the free-market “freshwater approach" to macroeconomics (associated with the University of Chicago, the University of Minnesota, Carnegie Mellon University, and the University of Rochester) whose reputation has been unfairly dragged through the mud during the recent financial crisis. It equally represents a rebuke to the dirigiste "saltwater approach" to macroeconomics (associated with Harvard, MIT, and Berkeley, among others) and especially to the pre-1980s "dinosaur Keynesianism" espoused by Paul Krugman, who was awarded the Sveriges Riksbank Prize in 2008 amid what many said was an ideological victory for Keynesian Economics over Classical Economics. With today’s prize award, the wheel has turned. The “rational expectations” economists, led by Sargent and his allies Robert E. Lucas, Nancy L. Stokey, and Edward C. Prescott, proved that Keynesian Economics had an unsound theoretical foundation, while Sims demonstrated empirically with his VARs that the prevailing (Keynesian) economic models of the 1970s had mediocre predictive power. Today’s prize honors the contributions of two preeminent economists, and reflects the shift in the economics profession ushered in by their contributions.

[cross-posted at]

July 22, 2011
July 14, 2011
June 1, 2011
…too square for hippies and too hip for squares.
Time magazine, panning the animated movie Yellow Submarine upon its 1968 release in US theaters by United Artists.
April 16, 2011

Jonathan Levin wins Clark Medal

Stanford University economics professor Jonathan Levin is the 2011 recipient of the John Bates Clark Medal.

The Clark Medal, awarded by the American Economic Association, honors the most promising United States economist under 40 years of age. Previous winners include Paul Samuelson, Milton Friedman, Paul Krugman, Larry Summers, and Steven Levitt.

Jonathan Levin’s professional homepage, including links to his research, can be found here.

April 2, 2011
December 8, 2010
A dream you dream alone is only a dream. A dream you dream together is reality.
John Lennon (9 October 1940 - 8 December 1980)
December 7, 2010
Tyranny of all kinds is to be abhorred, whether it be in the hands of one, or of the few, or of the many.
James Otis, Jr., The Rights of the British Colonies Asserted and Proved, 1764
December 4, 2010

The Triumph of Intellect and Romance over Brute Force and Cynicism: Craig Ferguson’s Tribute to Doctor Who

November 16, 2010
Society can be governed only by general rules. Government cannot accommodate itself to every particular case as it happens, nor to circumstances of particular persons. It must establish general comprehensive regulations for cases and persons. The only question is, which general rule will accommodate most cases and most persons.
John Adams, Letter to James Sullivan, 26 May 1776
November 4, 2010
…our civil rights have no dependence on our religious opinions, any more than our opinions in physics or geometry…
Thomas Jefferson, Virginia Statute for Religious Freedom, 1779