Americans Thomas Sargent and Christopher Sims won the Nobel economics prize today "for their empirical research on cause and effect in the macroeconomy," the Royal Swedish Academy of Sciences announced. The prize committee said the winners have developed methods for answering questions such as how economic growth and inflation are affected by a temporary increase in the interest rate or a tax cut.
Sargent and Sims—both 68—carried out their research independently in the 1970s and '80s. "Today, the methods developed by Sargent and Sims are essential tools in macroeconomic analysis," the citation said. Sargent is a professor at New York University, and Sims is a professor at Princeton. The economics prize capped this year's Nobel announcements. The awards will be handed out on Dec. 10, the anniversary of prize founder Alfred Nobel's death. The economics prize is not among the original awards established in Nobel's 1895 will, but was created in 1968 by the Swedish central bank in his memory. (Read more Nobel Prize for Economics stories.)