New York University Economics Professor Thomas Sargent, known for work on coordinating monetary and fiscal policy, stabilizing inflation, and fighting unemployment, has been awarded the 2011 Nobel Prize in Economics. Sargent is one of the world’s leaders in modern economics, and his research is widely recognized as having revolutionized both the field of economics and the economic strategy adopted by successful capitalist economies over the past 20 years.
Sargent shares the prize with Princeton University’s Christopher Sims. In awarding the prize, the Nobel Committee cited "their empirical research on cause and effect in the macroeconomy.”
A professor at NYU’s Faculty of Arts and Science and its Stern School of Business, Sargent is widely acknowledged as a pioneer of the rational expectations school of macroeconomics. His work, together with that of 1995 Nobel Laureate Robert Lucas, provided the basis for the adoption of monetary and fiscal policies that replaced Keynesian ideology and prioritized the maintenance of low inflation and stable interest rates among governments and central banks.
The Nobel Committee added that Sargent has “shown how structural macroeconometrics can be used to analyze permanent changes in economic policy. This method can be applied to study macroeconomic relationships when households and firms adjust their expectations concurrently with economic developments. Sargent has examined, for instance, the post-World War II era, when many countries initially tended to implement a high-inflation policy, but eventually introduced systematic changes in economic policy and reverted to a lower inflation rate.”
NYU has a total of 24 Nobel Prize winners, including both alumni and faculty, and has a total of three current faculty who are Nobel Laureates in Economics: NYU Stern School of Business Professor Michael Spence, the William R. Berkley Professor in Economics and Business (2001); Stern Professor Robert Engle, the Michael Armellino Professorship in Finance (2003); and Sargent (2011).
Sargent’s current work involves developing models to understand persistently high European unemployment rates; using new statistical methods to characterize rigorously the changing behavior of the Fed since WWII and the changing responsiveness of the U.S. economy to Fed actions; and applying techniques of robust control from engineering to optimal policy and the study of individual behavior.
Sargent’s career comprises over three decades of involvement in academic, foundation, and government work. He is currently an advisor to the Federal Reserve Banks of Minneapolis, San Francisco, and Chicago. He has had an ongoing involvement with the National Bureau of Economic Research, where he has served as a research associate, a position he has held on and off since 1970. Sargent was also a member of the Brookings Panel on Economic Activity from January to December 1973. From 1968 to 1969, he served as first lieutenant and captain in the U.S. Army, working as a staff member and acting director of the economics division of the office of the Assistant Secretary of Defense (Systems Analysis).
At NYU, Sargent plays a principal role in shaping the macroeconomics graduate program, and teaches at both graduate and undergraduate levels. A macroeconomist, Sargent joined NYU as the first W.R. Berkley Professor of Economics and Business in September 2002, a joint appointment by the Economics Departments at NYU’s Faculty of Arts and Science and the Stern School of Business. The professorship is one of several endowed by William R. Berkley, a 1966 graduate of the Stern School and an NYU Trustee. Berkley also serves as chairman of the Stern School Board of Overseers.
Sargent was a professor of economics at the University of Minnesota from 1975 to 1987, the David Rockefeller Professor at the University of Chicago from 1992 to 1998, and the Donald Lucas Professor of Economics at Stanford University from 1998 to 2002. He has been a senior fellow at the Hoover Institution since 1987.
Sargent earned his B.A. in economics from the University of California at Berkeley in 1964 and his Ph.D. from Harvard University in 1968.
Sargent is past president of the Econometric Society, the American Economic Association, and the Society for Economic Dynamics. He was a university medalist as Most Distinguished Scholar in the Class of 1964. Sargent was elected a fellow of the National Academy of Sciences and a fellow of the American Academy of Arts and Sciences, both in 1983. He was a recipient of the 1996-97 Erwin Plein Nemmers Prize in Economics from Northwestern University and was named Marshall Lecturer at Cambridge University in 1996. In 2001, Sargent was selected Most Distinguished Scholar by the California Institute of Technology.
Among his books are: Rational Expectations and Econometric Practice (University of Minnesota Press, 1981), with Robert E. Lucas Jr.; The Big Problem of Small Change (Princeton University Press, 2002), with Francois Velde; Recursive Macroeconomic Theory (MIT Press, 2004), with Lars Ljungqvist; and Robustness (Princeton University Press, 2008), with Lars Peter Hansen.
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