The Nobel Prize in Economics

This year’s winners are Kydland and Prescott. Atrios and Stirling Newberry provide nice summaries for non-economists of some of their principal insights.

Let me just add two quick thoughts. First, I’ve never been convinced that the “real business cycle” model (i.e. the idea that recessions are the result of negative supply shocks rather than demand shocks) that they helped to create makes much sense. But second, they are indeed brilliant economists who genuinely did change the study of macroeconomics for the better in many ways, and so it’s hard to think of much more deserving economists.