STOCKHOLM, Sweden – An American and a Norwegian won the 2004 Nobel prize in economics Monday for their work in determining the driving force behind business cycles worldwide.
Edward C. Prescott, 63 — the fifth American to receive the economics award since 2000 — teaches at Arizona State University (search) in Tempe, Ariz., and serves as an adviser to the Federal Reserve Bank of Minneapolis.
The pair received Nobel Memorial Prize in Economic Sciences for their work that showed that driving forces behind business cycle fluctuations and the design of economic policy are key areas in macroeconomic research.
Kydland and Prescott made fundamental contributions to macroeconomic analysis and the practice of monetary and fiscal policy in many countries, the Royal Swedish Academy of Sciences said in its citation.
Prescott earned a doctorate from Carnegie Mellon University in 1967. His research has focused on what causes economic depressions, why some countries thrive while others stagnate economically and what boosts a nation's economic productivity.
Kydland has done work on how the money supply affects the business cycle and on international trade.
This year's prize is worth $1.3 million.
Last year's winners were American Robert F. Engle and Briton Clive W.J. Granger for developing statistical tools that improved the forecasting of rates of economic growth, interest rates and stock prices.
The economics prize is the only award not established in the will of Swedish industrialist Alfred Nobel, the inventor of dynamite. The medicine, physics, chemistry, literature and peace prizes were first awarded in 1901, while the economics prize was set up separately by the Swedish central bank in 1968.
Past awards have recognized research on topics ranging from poverty and famine to how multinational corporations reap profits, and theories on how people choose jobs and the welfare losses caused by environmental catastrophes.
Even the Royal Swedish Academy of Sciences has said the United States is a driving force in economics, in part because of the money spent for research.
This year's Nobel Prize announcements began Oct. 4 with the prize in physiology or medicine going to Americans Richard Axel and Linda B. Buck for their work on the sense of smell.
Last Tuesday, Americans David J. Gross, H. David Politzer and Frank Wilczek won the physics prize for their explanation of the force that binds particles inside the atomic nucleus.
The chemistry prize was awarded Wednesday to Israelis Aaron Ciechanover and Avram Hershko and American Irwin Rose for their work in discovering a process that lets cells destroy unwanted proteins.
On Thursday, Austrian feminist writer Elfriede Jelinek won the Nobel Prize in literature.
Kenyan environmental activist Wangari Maathai won the Nobel Peace Prize on Friday for her work as leader of the Green Belt Movement, which has sought to empower women, better the environment and fight corruption in Africa for almost 30 years.
The Nobel Prizes are presented Dec. 10, the anniversary of the Nobel's death. The peace prize is awarded in Oslo, and the other Nobel prizes are presented in the Swedish capital, Stockholm.