Thomas J. Sargent has been affiliated with the Federal Reserve Bank of Minneapolis for over forty years. In 2011 he was awarded the 2011 Nobel Prize in Economics, joint with Princeton University’s Christopher Sims, for their “empirical research on cause and effect in the macroeconomy.”

Tom has held teaching positions at the University of Pennsylvania (1970–1971), the University of Minnesota (1971–1987), the University of Chicago (1991–1998), Stanford University (1998–2002), and Princeton University (2009). In September 2002 he became New York University’s first William R. Berkley Professor of Economics and Business. He has been a senior fellow at the Hoover Institution since 1987 and has served as president of the Econometric Society, the American Economic Association, and the Society for Economic Dynamics.

He earned his B.A. from the University of California, Berkeley, in 1964, where he was deemed Most Distinguished Scholar in the Class of 1964. His Ph.D. is from Harvard, and he won the Erwin Plein Nemmers Prize in Economics from Northwestern University in 1997. In 1983 he was elected a fellow of the National Academy of Sciences as well as a fellow of the American Academy of Arts and Sciences.

Tom’s work focuses primarily on macroeconomics, monetary economics, and time series econometrics. He is recognized as one of the leaders of the “rational expectations revolution,” a term used to describe “the many economic situations in which the outcome depends partly on what people expect to happen” (Sargent, Concise Encyclopedia of Economics, s.v. “Rational Expectations”). Sargent’s many distinguished works include Rational Expectations and Econometric Practice (with Robert E. Lucas Jr.), The Big Problem of Small Change (with François Velde), Recursive Macroeconomic Theory (with Lars Ljungqvist), and Robustness (with Lars Peter Hansen).

Two Difficulties in Interpreting Vector Autoregressions

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