Europe on the brink. United States risks double-dip recession. Financial turmoil threatens world economy. Not the sort of headlines you would associate with a Nobel-prize-winning contribution to the progress of humanity. To their credit, recipients Christopher Sims of Princeton and Thomas Sargent of New York University did develop methods and models that are wisely used by economists around the world, including central banks. But it’s unclear what practical applications their findings have for the world’s current economic predicament.
The people who hand out Nobel Prizes are obviously keen this year to trumpet a new world order in economics as well as politics. Hot on the heels of giving Barack Obama the peace prize, they have awarded this year’s economics prize for research into governance.