The Nobel prize in economic science was awarded Monday to Thomas J. Sargent at New York University and Christopher A. Sims at Princeton University for their research looking at the cause-and-effect relationship between economic policy and the broader economy.   

Their work uses statistical analysis to disentangle the question of whether a policy change that happened in the past affected the economy or whether it was made in anticipation of events that policymakers thought would happen later. This research has also helped economists better understand how people’s expectations for policy affect the economy.   Read more