Interview with the 2011 Laureates in Economic Sciences Thomas J. Sargent and Christopher A. Sims, 6 December 2011. The interviewer is Adam Smith, Editorial Director of Nobel Media.
The Laureates describe how computer models help them conduct large-scale economic experiments and disagree on whether people behave rationally in an economy. Christopher A. Sims reveals that economists still don’t have models to explain why money is so important in the modern economy. They also discuss why previous models weren’t able to predict the current economic crisis.
The 2011 Nobel Laureates met at the Bernadotte Library in Stockholm on 9 December 2011 for the traditional round-table discussion and TV program ‘Nobel Minds’. The Laureates discuss issues of global concern, their own research, and their early influences.
Telephone interview with Christopher A. Sims recorded immediately following the announcement of the 2011 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, 10 October 2011. The interviewer is Adam Smith, Editorial Director of Nobel Media.
[Christopher Sims] Hello?
[Adam Smith] Hello. May I speak to Christopher Sims, please?
[CS] This is he.
[AS] Oh, hello, this is Adam Smith calling from Nobelprize.org.
[CS] I’m sorry I didn’t answer your previous calls but there were so many that I just turned everything off.
[AS] How very wise. It’s probably the last quiet time you’ll have for some days I’d imagine.
[AS] What were you doing when the call came?
[CS] I was sleeping. We actually got the call twice because the first time it came my wife couldn’t find the talk button on the phone.
[AS] Oh, well, nice of them to call back. That’s good. You’ve been awarded with Thomas Sargent and you were graduate students together so you’ve known each other a long time?
[CS] Yes. We’ve known each other a long time.
[AS] Yes, and do you still work together or do you work independently but in the same area?
[CS] Recently – we haven’t done joint research in recent years but we are jointly teaching a graduate course in macroeconomics, at Princeton actually, this semester.
[AS] Ah, okay.
[CS] And we were colleagues at University of Minnesota for many years.
[AS] Yes, indeed, yes, indeed. And, you’ve referred to the media attention already. With so much focus on the world economy at the moment, I suppose it’s perhaps an even greater response than usual to the creation of new Laureates in Economic Sciences. Do you welcome the sort of attention that will follow this award?
[CS] Do I welcome the attention? Yes, I think it’s good to have people thinking about macroeconomics and about careful, quantitative, scientific macroeconomics.
[AS] Hmm, and that’s broadly the contribution that you and Thomas Sargent have made – that you’ve helped to put people’s expectations back in the models and made them more precise?
[CS] Uhm, yes, using and applying rigorous statistical methods also, as we do that.
[AS] I used the analogy with Thomas Sargent, but you’re basically creating laboratories into which you can put data and see how things would turn out if particular policies were followed. Is that right, broadly?
[CS] That’s the way they described Tom’s research. It’s not really very close to what they awarded the prize to me for. His approach is to start with a model economy for the most part, though not all of his research is like that, but he usually starts with a model economy and then tries to fit it to data and run experiments in it. I usually start with a statistical model of the data and then add economic assumptions sparingly until I can begin to get answers.
[AS] Right, right. And, the Academy as made the distinction between the fact that he works on effects of long term policy and you work more on economic shocks. Would that also be broadly true?
[CS] Well, that’s the way a lot of people think about the difference between our research, but I think it’s not as clear, or sharp, as that. I probably do put more emphasis on being sure the short run implications of a model are accurate. But, we both have worked on both long and short term effects. And, in fact, my more recent research is very long term oriented. I have recent research that’s not really in the Nobel citation that’s oriented towards thinking about long run consequences.
[AS] Mmhmm. And will you, do you think, be able to get back to work straight away or do think this is going to eat up the next little while?
[CS] I’m hoping to get back to work pretty straight away. I have a class to meet at ten o’clock!
[CS] … And, I still have a few papers to grade before I go.
[AS] Then I should get off the phone and let you continue!
[CS] But there will be a press conference in the middle of the day which will break up the routine.
[AS] Yeah, I imagine Princeton has been preparing for this moment for some time and has some plans for you
[AS] Okay, well, splendid. Thank you very much for talking to us. When you come to Stockholm we have a chance to speak at greater length, but for now congratulations and thank you very much indeed.
[CS] Okay. Thank you.
[AS] Okay, bye, bye.
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