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Two Americans and One British Cypriot Economists Receive Nobel In Economics
By KTM Metro Reporter
October 11, 2010: the Royal Swedish Academy of Sciences has awarded today the Nobel Prize of 2010 in economics to Americans Peter Diamond and Dale Mortensen, and British Cypriot Christopher Pissarides for "their analysis of markets with search frictions." Diamond is an economist at the Massachusetts Institute of Technology. Mortensen is an economics professor at Northwestern University in Evanston, Illinois. Pissarides teaches at the London School of Economics.
US President Barack Obama has nominated Peter Diamond to become a member of the US Federal Reserve, but Republicans have held up the appointment because he is for unemployment benefits that will help to reduce the unemployment.
An academy statement awarding the Noble Prize has said that the trio has developed the theories on search markets to understand the ways in which unemployment, job vacancies and wages are affected by the regulation and economic policy.
The BBC NEWS has the following to say on the Nobel Prize:
The Royal Swedish Academy of Sciences has praised their work on why unemployment stays high in times of many vacancies. Among other subjects, their research looked into why unemployment remains high even at times when there are large numbers of job vacancies.
Classical economic theory says that buyers and sellers - or in this case, employers and potential employers - always find each other. But this does not happen in the real world.
The laureates' general conclusion is that searching for jobs and stabilizing the labor market can take up so much time and resources that economies can have both high jobless numbers and high vacancy rates simultaneously.
The citation from the Swedish academy said that the laureates' work on so-called friction theory "help us understand the ways in which unemployment, job vacancies, and wages are affected by regulation and economic policy.
Paul Krugman, who won the Nobel economics prize in 2008, described the award as "richly deserved" because friction theory is "very important stuff".
The 10m Swedish kronor ($1.5m) economics prize was set up by the Royal Swedish Academy of Sciences in 1968.
