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This year's laureates "have developed methods for answering ...
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questions regarding the causal relationship between economic policy and different macro-economic variables, such as GDP, inflation, employment and investments," the jury said.
Sargent worked on structural macro-economics, which can be used to analyse permanent changes in economic policy.
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"This method can be applied to study macro-economic relations when households and firms adjust their expectations concurrently with economic developments," the jury said.
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Sims' method is meanwhile based on "vector autoregression, and shows how the economy is affected by temporary changes in economic policy and other factors," such as a central bank rate hike.
While the pair worked separately, their work is complementary and "has been adopted by researchers and policymakers around the world ...
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(and their methods) are essential tools in macro-economic analysis," it said.
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Sargent, born in 1943, is professor of economics and business at