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Vol. LXV, No. 41
Wednesday, October 12, 2011
It was 6:15 a.m. when the phone rang in Christopher A. Simss bedroom. His wife answered, but because it was dark, she couldnt see the talk button. Mr. Sims managed to get a look at the caller ID before the phone stopped ringing. It was an area code that he didnt recognize, so the couple went back to sleep for a moment.
I said, Wait a minute. The Nobel Prize would be calling at this time, said Mr. Sims, who is Princeton Universitys Harold H. Helm 20 Professor of Economics and Banking. When the phone rang again, it was indeed a representative of the coveted award, calling to tell Mr. Sims that he and his colleague, visiting professor Thomas J. Sargent, had won the 2011 Nobel Memorial Prize in Economic Sciences in Memory of Alfred Nobel for their empirical research on cause and effect in the macroeconomy.
Mr. Sims relayed the story at a press conference Monday afternoon in Richardson Auditorium. Seated on stage with Mr. Sargent, an economist at New York University who is co-teaching a course with Mr. Sims at Princeton; and University officials, Mr. Sims said he couldnt be happier about sharing the 10 million Swedish krona ($1.48 million) prize from the Royal Swedish Academy of Sciences with his long-time friend Mr. Sargent.
Weve had a series of continuing arguments, many of which are still going on, as I slowly convince him of the error of his earlier positions, he said, to laughter from the audience. Several of the two professors students were in attendance at the press conference.
Mr. Sims, 68, is the third permanent member of the Princeton faculty in the past decade to win the Nobel Prize in economics. Mr. Sargent, also 68, is the second visiting member to be so recognized. There are currently 13 recipients on the faculty, including emeritus and visiting professors. Recent winners in the field of economics are Paul Krugman in 2008, and Daniel Kahneman in 2002. Eric S. Maskin, a visiting lecturer and professor, won in 2007.
Mr. Sims has developed statistical tools that have been useful in understanding the effect of monetary policy on the economy. Mr. Sargent, who is a visiting professor at Princeton for a second year, is widely known for his work on coordinating monetary and fiscal policy, stabilizing inflation, and fighting unemployment. The two are co-teaching a graduate course on advanced macroeconomic theory this semester.
The long-time colleagues attended graduate school together at Harvard University and served together on the faculty of the University of Minnesota for more than a decade. Mr. Sims spent nine years teaching at Yale University before coming to Princeton in 1999.
Everyone will think this a great choice, said Alan Blinder, the Gordon S. Rentschler Memorial Professor of Economic at Princeton, in an e-mail. Each man, in his own way, has revolutionized macroeconomics with creative, novel, and useful contributions both to methodology and to policy questions.
Mr. Sims and Mr. Sargent have pioneered an approach to economic thinking that is centered on data and uses statistics and modeling to improve decision-making under uncertainty. They believe that a quantitative analysis of history can help shed light on how countries make economic decisions.
Asked about the future of the 17-member Euro zone, both men expressed pessimism. The prospects are dim if the region cant find a way to share its fiscal burden, Mr. Sims said. Mr. Sargent compared the situation to the United States in its early history, when 13 states were each running their own economic policies. The difficult thing is the politics, he said.
The Nobel Laureates were also asked their opinion of the current Occupy Wall Street protests. Their objectives are fairly incoherent, Mr. Sims replied, adding that he marched on Washington as a college student. They do reflect a legitimate irritation that policy-makers dont seem to be able to restart the economy and many people are hurting.
Both men were quick to credit others in their road to the Nobel Prize. This isnt a solo operation, said Mr. Sargent. Were dependent on our scholars and our students. We use a combination of statistics and models to say what we can about the world.
Mr. Sims said, There are many, many people who have contributed to these areas of economics. I hope they feel this award is, in part, for them.
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