A Nobel for Thomas Sargent

No matter how skeptical one is of the authority of “experts,” it’s hard to avoid paying at least some attention to the people who award the Nobel prize—especially when they give one to someone who tends to support some things one tended to believe already.

So it is in the case of Thomas Sargent, the New York University professor who was announced Monday as a winner of the Nobel in economics. An interview of Professor Sargent by the Minneapolis Fed in August 2010 summed up some of his contributions succinctly: “Policymakers can’t manipulate the economy by systematically ‘tricking’ people with policy surprises. Central banks, for example, can’t permanently lower unemployment by easing monetary policy, as Sargent demonstrated with Neil Wallace, because people will (rationally) anticipate higher future inflation and will (strategically) insist on higher wages for their labor and higher interest rates for their capital.”

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