Thomas J. Sargent

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Thomas J. Sargent
Nobel Prize 2011-Press Conference KVA-DSC 7770.jpg
Sargent in 2011
Born (1943-07-19) July 19, 1943 (age 79)
Institution Hoover Institution
Carnegie-Mellon University
University of Pennsylvania
University of Minnesota
University of Chicago
Stanford University
New York University
Peking University HSBC Business School
Field Macroeconomics, monetary economics
Alma mater UC Berkeley, (BA)
Harvard University, (PhD)
John R. Meyer
Robert Litterman
Monika Piazzesi
Mariacristina De Nardi
Ellen McGrattan
Lars Peter Hansen
Albert Marcet
Noah Williams
Laura Veldkamp
Richard Clarida
Danny Quah
Sagiri Kitao
Martin Eichenbaum
Lawrence J. Christiano
Greg Kaplan
Influences John F. Muth
Robert E. Lucas, Jr.
Christopher A. Sims
Neil Wallace
Awards NAS Award for Scientific Reviewing (2011)

Nemmers Prize (1996)

Nobel Memorial Prize in Economic Sciences (2011)
Information at IDEAS / RePEc
Thomas J. Sargent
AllegianceFlag of the United States.svg  United States
Service/branchFlag of the United States Army.svg  United States Army
Years of service1968-1969
Rank US-O3 insignia.svg Captain [1]

Thomas John Sargent (born July 19, 1943) is an American economist and the W.R. Berkley Professor of Economics and Business at New York University. [2] He specializes in the fields of macroeconomics, monetary economics, and time series econometrics. As of 2020, he ranks as the 29th most cited economist in the world. [3] He was awarded the Nobel Memorial Prize in Economics in 2011 together with Christopher A. Sims for their "empirical research on cause and effect in the macroeconomy". [4]



Sargent graduated from Monrovia High School. [5] He earned his B.A. from the University of California, Berkeley in 1964, being the University Medalist as Most Distinguished Scholar in Class of 1964, and his PhD from Harvard in 1968, under supervision of John R. Meyer. [6] Sargent's classmates at Harvard included Christopher A. Sims. After serving in the U.S. Army as a first lieutenant and captain, he moved on to teaching. [7] He held teaching positions at the University of Pennsylvania (1970–71), University of Minnesota (1971–87), University of Chicago (1991–98), Stanford University (1998–2002) and Princeton University (2009), and is currently a professor of economics at New York University (since 2002). He previously held the position of President of the American Economic Association and the Econometric Society where he has been a fellow since 1976. [7] In 1983, Sargent was elected to the National Academy of Sciences and also the American Academy of Arts and Sciences. [8] He has been a senior fellow of the Hoover Institution at Stanford University since 1987.

Professional contributions

Sargent is one of the leaders of the "rational expectations revolution," which argues that the people being modeled by economists can predict the future, or the probability of future outcomes, at least as well as the economist can with his model. Rational expectations was introduced into economics by John Muth, [9] then Robert Lucas, Jr., and Edward C. Prescott took it much farther. By some works written in close collaboration with Lucas and Neil Wallace, Thomas J. Sargent could fundamentally contribute to the evolution of new classical macroeconomics. [10]

Sargent's main contributions to rational expectations were these:

In 1975 he and Wallace proposed the policy-ineffectiveness proposition, which challenged a basic assumption of Keynesian economics.

Sargent went on to refine or extend rational expectations reasoning by further:

Sargent has also been a pioneer in introducing recursive economics to academic study, especially for macroeconomic issues such as unemployment, fiscal and monetary policy, and growth. His series of textbooks, co-authored with Lars Ljungqvist, are seminal in the contemporary graduate economics curriculum.

Sargent has pursued a research program with Ljungqvist [26] designed to understand determinants of differences in unemployment outcomes in Europe and the United States during the last 30 years. The two key questions the program addresses are why, in the 1950s and 1960s, unemployment was systematically lower in Europe than in the United States and why, for two and a half decades after 1980, unemployment has been systematically higher in Europe than in the United States. In "Two Questions about European Unemployment," the answer is that "Europe has stronger employment protection despite also having had more generous government supplied unemployment compensation"." While the institutional differences remained the same over this time period, the microeconomic environment for workers changed, with a higher risk of human capital depreciation in the 1980s. [27]

In 1997, he won the Nemmers Prize in Economics [28]

In 2011, he was awarded the NAS Award for Scientific Reviewing from the National Academy of Sciences [29] and, in September, he became the recipient of the 2011 CME Group-MSRI Prize in Innovative Quantitative Applications. [30]

Sargent is known as a devoted teacher. Among his PhD advisees are men and women at the forefront of macroeconomic research [ who? ]. Sargent's reading group at Stanford and NYU is a famous institution among graduate students in economics. [31] [32]

In 2016, Sargent helped found the non-profit QuantEcon project, which is dedicated to the development and documentation of modern open source computational tools for economics, econometrics, and decision making. [33]

Currently he is director of the Sargent Institute of Quantitative Economics and Finance (SIQEF) at Peking University HSBC Business School in Shenzhen. [34]

Nobel Prize

Interview with Thomas J. Sargent after his Nobel lecture

On October 10, 2011, Sargent, with Christopher A. Sims, was awarded the Nobel Memorial Prize in Economic Sciences. The award cited their "empirical research on cause and effect in the macroeconomy". [35] His Nobel lecture, "United States Then, Europe Now," was delivered on December 11, 2011. [36] [37]

He is featured playing himself in a television commercial for Ally Financial in which he is asked if he can predict CD rates two years from now, to which he simply answers, "No." [38]

Sargent is notable for making short speeches. For example, in 2007 his Berkeley graduation speech consumed 335 words. [39] [40]

Selected publications

Related Research Articles

<span class="mw-page-title-main">Adaptive expectations</span>

In economics, adaptive expectations is a hypothesized process by which people form their expectations about what will happen in the future based on what has happened in the past. For example, if people want to create an expectation of the inflation rate in the future, they can refer to past inflation rates to infer some consistencies and could derive a more accurate expectation the more years they consider.

<span class="mw-page-title-main">Macroeconomics</span> Study of an economy as a whole

Macroeconomics is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, and government spending to regulate an economy’s growth and stability. This includes regional, national, and global economies. According to a 2018 assessment by economists Emi Nakamura and Jón Steinsson, economic "evidence regarding the consequences of different macroeconomic policies is still highly imperfect and open to serious criticism."

<span class="mw-page-title-main">Rational expectations</span> Economics concept

In economics, "rational expectations" are model-consistent expectations, in that agents inside the model are assumed to "know the model" and on average take the model's predictions as valid. Rational expectations ensure internal consistency in models involving uncertainty. To obtain consistency within a model, the predictions of future values of economically relevant variables from the model are assumed to be the same as that of the decision-makers in the model, given their information set, the nature of the random processes involved, and model structure. The rational expectations assumption is used especially in many contemporary macroeconomic models.

<span class="mw-page-title-main">Robert Lucas Jr.</span> American economist

Robert Emerson Lucas Jr. is an American economist at the University of Chicago, where he is currently the John Dewey Distinguished Service Professor Emeritus in Economics and the College. Widely regarded as the central figure in the development of the new classical approach to macroeconomics, he received the Nobel Prize in Economics in 1995 "for having developed and applied the hypothesis of rational expectations, and thereby having transformed macroeconomic analysis and deepened our understanding of economic policy". He has been characterized by N. Gregory Mankiw as "the most influential macroeconomist of the last quarter of the 20th century." As of 2020, he ranks as the 11th most cited economist in the world.

<span class="mw-page-title-main">Phillips curve</span> Single-equation economic model relating wages to unemployment

The Phillips curve is an economic model, named after William Phillips hypothesizing a correlation between reduction in unemployment and increased rates of wage rises within an economy. While Phillips himself did not state a linked relationship between employment and inflation, this was a trivial deduction from his statistical findings. Paul Samuelson and Robert Solow made the connection explicit and subsequently Milton Friedman and Edmund Phelps put the theoretical structure in place.

Monetary economics is the branch of economics that studies the different competing theories of money: it provides a framework for analyzing money and considers its functions, and it considers how money can gain acceptance purely because of its convenience as a public good. The discipline has historically prefigured, and remains integrally linked to, macroeconomics. This branch also examines the effects of monetary systems, including regulation of money and associated financial institutions and international aspects.

The Lucas critique, named for American economist Robert Lucas's work on macroeconomic policymaking, argues that it is naive to try to predict the effects of a change in economic policy entirely on the basis of relationships observed in historical data, especially highly aggregated historical data. More formally, it states that the decision rules of Keynesian models—such as the consumption function—cannot be considered as structural in the sense of being invariant with respect to changes in government policy variables. The Lucas critique is significant in the history of economic thought as a representative of the paradigm shift that occurred in macroeconomic theory in the 1970s towards attempts at establishing micro-foundations.

<span class="mw-page-title-main">Macroeconomic model</span> Model used in Macroeconomics

A macroeconomic model is an analytical tool designed to describe the operation of the problems of economy of a country or a region. These models are usually designed to examine the comparative statics and dynamics of aggregate quantities such as the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the level of prices.

Robert Joseph Barro is an American macroeconomist and the Paul M. Warburg Professor of Economics at Harvard University. Barro is considered one of the founders of new classical macroeconomics, along with Robert Lucas, Jr. and Thomas J. Sargent. He is currently a senior fellow at Stanford University's Hoover Institution and co-editor of the influential Quarterly Journal of Economics.

<span class="mw-page-title-main">John B. Taylor</span> American economist (born 1946)

John Brian Taylor is the Mary and Robert Raymond Professor of Economics at Stanford University, and the George P. Shultz Senior Fellow in Economics at Stanford University's Hoover Institution.

<span class="mw-page-title-main">Edmund Phelps</span> American economist

Edmund Strother Phelps is an American economist and the recipient of the 2006 Nobel Memorial Prize in Economic Sciences.

The policy-ineffectiveness proposition (PIP) is a new classical theory proposed in 1975 by Thomas J. Sargent and Neil Wallace based upon the theory of rational expectations, which posits that monetary policy cannot systematically manage the levels of output and employment in the economy.

<span class="mw-page-title-main">Lars Peter Hansen</span> American economist

Lars Peter Hansen is an American economist. He is the David Rockefeller Distinguished Service Professor in Economics, Statistics, and the Booth School of Business, at the University of Chicago and a 2013 recipient of the Nobel Memorial Prize in Economics.

<span class="mw-page-title-main">Christopher A. Sims</span> American econometrician and macroeconomist

Christopher Albert Sims is an American econometrician and macroeconomist. He is currently the John J.F. Sherrerd '52 University Professor of Economics at Princeton University. Together with Thomas Sargent, he won the Nobel Memorial Prize in Economic Sciences in 2011. The award cited their "empirical research on cause and effect in the macroeconomy".

Phillip David Cagan was an American scholar and author. He was Professor of Economics Emeritus at Columbia University.

<span class="mw-page-title-main">New classical macroeconomics</span> School of thought in macroeconomics

New classical macroeconomics, sometimes simply called new classical economics, is a school of thought in macroeconomics that builds its analysis entirely on a neoclassical framework. Specifically, it emphasizes the importance of rigorous foundations based on microeconomics, especially rational expectations.

<span class="mw-page-title-main">History of macroeconomic thought</span> Aspect of history

Macroeconomic theory has its origins in the study of business cycles and monetary theory. In general, early theorists believed monetary factors could not affect real factors such as real output. John Maynard Keynes attacked some of these "classical" theories and produced a general theory that described the whole economy in terms of aggregates rather than individual, microeconomic parts. Attempting to explain unemployment and recessions, he noticed the tendency for people and businesses to hoard cash and avoid investment during a recession. He argued that this invalidated the assumptions of classical economists who thought that markets always clear, leaving no surplus of goods and no willing labor left idle.

Neil Wallace is an American economist and professor of economics at Penn State University. He is considered one of the main proponents of new classical macroeconomics in the field of economics.

The Lucas aggregate supply function or Lucas "surprise" supply function, based on the Lucas imperfect information model, is a representation of aggregate supply based on the work of new classical economist Robert Lucas. The model states that economic output is a function of money or price "surprise". The model accounts for the empirically based trade off between output and prices represented by the Phillips curve, but the function breaks from the Phillips curve since only unanticipated price level changes lead to changes in output. The model accounts for empirically observed short-run correlations between output and prices, but maintains the neutrality of money in the long-run. The policy ineffectiveness proposition extends the model by arguing that, since people with rational expectations cannot be systematically surprised by monetary policy, monetary policy cannot be used to systematically influence the economy.

Lars Ljungqvist is a Swedish economist probably best known as the author of Recursive Macroeconomic Theory, a standard graduate level textbook of modern macroeconomics, with Thomas J. Sargent.


  1. "NYU Bio: Thomas J. Sargent". NYU Stern . Retrieved 11 November 2022.
  2. "NYU Bio: Thomas J. Sargent". NYU Stern . Retrieved 11 November 2022.
  3. "Economist Rankings at IDEAS". Retrieved 2011-10-10.
  4. "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2011" (Press release). Nobel Prize. 10 October 2011.
  5. "Monrovia High grad wins Nobel Prize in economics". Pasadena Star-News. 10 October 2011. Archived from the original on 24 September 2015.
  6. Sent, Esther-Mirjam (2006). The Evolving Rationality of Rational Expectations: An Assessment of Thomas Sargent's Achievements. Cambridge University Press. p. 35. ISBN   9780521027717.
  7. 1 2 URL:
  8. "Book of Members, 1780–2011: Chapter S" (PDF). American Academy of Arts and Sciences. Retrieved 13 October 2011.
  9. Muth, J. F. (1961). "Rational Expectations and the Theory of Price Movements". Econometrica. 29 (3): 315–35. doi:10.2307/1909635. JSTOR   1909635.
  10. Galbács, Peter (2015). The Theory of New Classical Macroeconomics. A Positive Critique. Contributions to Economics. Heidelberg/New York/Dordrecht/London: Springer. doi:10.1007/978-3-319-17578-2. ISBN   978-3-319-17578-2.
  11. Sargent, Thomas J., and Neil Wallace, 1975. "'Rational' Expectations, the Optimal Monetary Instrument, and the Optimal Money Supply Rule," Journal of Political Economy, 83(2), pp. pp. 241–54.
  12. Sargent, T. J. (1981). "Interpreting Economic Time Series" (PDF). The Journal of Political Economy. 89 (2): 213–48. doi:10.1086/260963. JSTOR   1833309. S2CID   152875567.
  13. Sargent, Thomas J.; Wallace, Neil (1976). "Rational Expectations and the Theory of Economic Policy" (PDF). Journal of Monetary Economics. 2 (2): 169–83. doi:10.1016/0304-3932(76)90032-5.[ permanent dead link ]
  14. Sargent, T. J. (1979). "A note on maximum likelihood estimation of the rational expectations model of the term structure" (PDF). Journal of Monetary Economics. 5: 133–35. doi:10.1016/0304-3932(79)90029-1.
  15. Sargent, T. J. (1977). "The Demand for Money during Hyperinflations under Rational Expectations: I". International Economic Review. 18 (1): 59–82. doi:10.2307/2525769. JSTOR   2525769.
  16. Sargent, T. J.; Fand, D.; Goldfeld, S. (1973). "Rational Expectations, the Real Rate of Interest, and the Natural Rate of Unemployment". Brookings Papers on Economic Activity. 1973 (2): 429–80. doi:10.2307/2534097. JSTOR   2534097.
  17. Sargent, Thomas J. & Neil Wallace (1981). "Some Unpleasant Monetarist Arithmetic". Federal Reserve Bank of Minneapolis Quarterly Review. 5 (3): 1–17.
  18. Sargent, Thomas J. (1983). "The Ends of Four Big Inflations" in: Inflation: Causes and Effects, ed. by Robert E. Hall, University of Chicago Press, for the NBER, 1983, p. 41–97.
  19. Sargent, T. J.; Velde, F. O. R. (1995). "Macroeconomic Features of the French Revolution". The Journal of Political Economy. 103 (3): 474–518. doi:10.1086/261992. S2CID   153904650.
  20. Sargent, Thomas J. (1992). Rational Expectations and Inflation. Harper and Row. ISBN   978-0-06-500280-5.
  21. Sargent, Thomas J.; Velde, F.R. (2003). The Big Problem of Small Change. Princeton University Press. ISBN   978-0-691-11635-8.
  22. Sargent, Thomas J. (1993). Bounded Rationality in Macroeconomics. Oxford University Press. ISBN   978-0-19-828869-5. Description and chapter-preview 1st-page links.
  23. Marcet, A. (1989). "Convergence of least squares learning mechanisms in self-referential linear stochastic models*1". Journal of Economic Theory. 48 (2): 337–68. doi:10.1016/0022-0531(89)90032-X.
  24. 1 2 Sargent, Thomas J. (1999). The Conquest of American Inflation. Princeton University Press. ISBN   978-0-691-00414-3.
  25. Hansen, Lars Peter; Sargent, Thomas J. (2008). Robustness. Princeton University Press. ISBN   978-0-691-11442-2.
  26. "Lars Ljungqvist". Archived from the original on 2011-12-29.
  27. Ljungqvist, L.; Sargent, T. J. (2008). "Two Questions about European Unemployment". Econometrica. 76: 1. doi:10.1111/j.0012-9682.2008.00816.x.
  28. "NYU Stern - Thomas Sargent - William R. Berkley Professor of Economics and Business".
  29. "NAS Award for Scientific Reviewing". National Academy of Sciences. Archived from the original on 18 March 2011. Retrieved 27 February 2011.
  30. "2011 CME Group-MSRI Prize".
  31. "Conference in Honor of Tom Sargent's Nobel Prize in Economics and Reading Group Reunion".
  32. "Videos of Reading Group Conference". YouTube .
  33. "QuantEcon". QuantEcon. Retrieved 4 August 2017.
  34. "Interview with Thomas Sargent on the PHD and Elite MA Programs at PHBS - News - Sargent Institute of Quantitative Economics of Finance".
  35. "The Prize in Economic Sciences 2011". 2008-12-10. Retrieved 2011-10-10.
  36. Sargent, Thomas J. (2011)
  37. United States Then, Europe Now Archived 2013-01-15 at the Wayback Machine
  38. AdWeek: Economist Thomas J. Sargent appears in ad for Ally Bank
  39. Tom Sargent Summarizes Economics
  40. Text of Berkeley Speech Archived 2014-08-11 at the Wayback Machine
Academic offices
Preceded by President of the American Economic Association
2007– 2008
Succeeded by
Preceded by Laureate of the Nobel Memorial Prize in Economics
Served alongside: Christopher A. Sims
Succeeded by