Nobel Prize in Economic Sciences 2004 awarded jointly to Finn E Kydland and Edward C. Prescott
The Royal Swedish Academy of Sciences has awarded the Bank of Sweden Prize in Economic Sciences in memory of Alfred Nobel, 2004 jointly to Finn E. Kydland (Norwegian citizen) and Edward C. Prescott (U.S. citizen). "This award is both important and welcome," says Mr. Svein Gjedrem, Governor of Norges Bank.
This year the prize has been awarded for contributions in the field of macroeconomics. Macroeconomic research is aimed at achieving a better understanding of phenomena such as inflation, changes in output and unemployment and long-term economic growth.
The citation from the Royal Swedish Academy of Sciences said that Finn Kydland and Edward Prescott received the prize "for their contributions to dynamic macroeconomics: the time consistency of economic policy and the driving forces behind business cycles". Kydland and Prescott have, for example, provided explanations for the unsuccessful attempts to fight inflation in the 1970s. In their pioneering work from 1977, they pointed to the need for greater predictability in monetary policy.
In recent years, Kydland and Prescott's research has been continued. Modern monetary policy research has focused on reforms that also include the institutional framework for monetary policy.
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