Americans Thomas Sargent and Christopher Sims shared the Nobel Prize in economics Monday for work that governments use to gauge the effect of policy, but they had no easy answers to a global crisis one called simply “this mess”. Central to research the two conducted separately in the 1970s were efforts to model and quantify cause and effect in economies, including the complex interplay of state and central bank policy with the expectations of people and businesses. “Panics and crises, ... what's going on in Europe now with the euro, that's all about expectations about what other people are going to do,” Sargent, 68, from New York University, said in an interview aired on the Nobel Prize organization's website. For example, government spending to bounce an economy out of slump may have its impact limited by people seeing the limits to state finances and expecting the stimulus to run out. But, while his research had “tightened” ideas about how expectations influenced policies and their impact, Sargent cautioned that he and Sims, long colleagues at the University of Minnesota, had no easy answers to today's crisis. “We're just bookish types that look at numbers and try to figure out what's going on,” Sargent said. “We try to experiment in our models before we wreck the world.”
