2004 Nobel Prize in Economic Sciences

The 2004 Nobel Prize in Economic Sciences has been awarded to Finn E. Kydland and Edward C. Prescott. The prize was announced by the Royal Swedish Academy of Sciences in Stockholm on 11 October 2004.

The citation

The citation reads: "for their contributions to dynamic macroeconomics: the time consistency of economic policy and the driving forces behind business cycles". They share the prize equally.

The laureates

Finn E. Kydland was born in 1943 in Gjesdal, Norway, and is affiliated with Carnegie Mellon University, Pittsburgh and the University of California, Santa Barbara. Edward C. Prescott was born in 1940 in Glens Falls, the United States, and is affiliated with Arizona State University, Tempe and Federal Reserve Bank of Minneapolis, Minneapolis.

Why it matters

Their work on how governments can make credible promises changed the way central banks are run, and helped make the case for independent central banks. They also studied what drives the ups and downs of the business cycle.

The prize

The prize is worth 10 million Swedish kronor, divided between the laureates. It will be presented at a ceremony in Stockholm on 10 December, the anniversary of the death of Alfred Nobel, the Swedish inventor of dynamite whose will founded the prizes in 1895. Strictly, this award is the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. It was established by the Swedish central bank in 1968, but is presented alongside the Nobel Prizes.