Nobel Winners Saved Macroeconomics After Keynes: Edward Glaeser

Oct. 10 (Bloomberg) -- In the midst of great macroeconomicuncertainty, the Nobel Prize in Economics has been awarded toThomas Sargent, of New York University, and Christopher Sims, ofPrinceton University, for work on “empirical macroeconomics.”Sargent and Sims are both superb scholars whose work has moldedmacroeconomics. They helped destroy the false certainty of anolder Keynesian orthodoxy, and did their best to build morerobust tools that shed light on public policy over the businesscycle.

Sargent and Sims are part of a small cadre of intellectualrebels who have pointed out the logical inconsistencies buriedwithin seemingly impressive Keynesian models of macroeconomics.In the early 1960s, Keynesian insights had been used somewhatsuccessfully to iron out the business cycle. President John F.Kennedy supported a Keynesian plan to lower taxes to stave off arecession, and the economic slump duly diminished.