Broadcast: October 17, 2003
This is Bob Doughty with the VOA Special English Economics Report.
Two professors, Robert Engle and Clive Granger, are the winners this year of the Nobel prize in economics. Professor Engle is American; Professor Granger is British. The award honors their work to help economists better understand what are called "time series." These show the development of things like stock prices, interest rates and levels of national production.
The two professors worked together for many years at the University of California at San Diego. They established one of the top programs in economic measurement. Clive Granger became a professor at New York University three years ago. Both professors are now partly retired, but still active in their work.
Professor Granger’s work in the nineteen-seventies and eighties permitted him to develop methods to study economic changes. He was interested in how prices change over time. He found that economists treat many economic changes as if they did not have forces that act upon them. This can lead to misleading results.
Professor Granger developed methods to test his theories. These methods showed which economic changes are related. For example, the methods showed a link between the foreign exchange rate of a nation’s money and prices in its economy. Professor Granger worked with Professor Engle to develop tests to show which economic changes are, and are not, related. Economists use these tests widely.
Professor Engle also developed ways to estimate the risk of an investment during a period of time. Today these methods help banks, for example, decide how much wealth they need to remain financially healthy.
Robert Engle and Clive Granger will share the prize of about one-million-three-hundred-thousand dollars.
The award is officially called the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel. Alfred Nobel did not establish the prize. The Bank of Sweden established it in nineteen-sixty-eight. The Royal Swedish Academy of Sciences in Stockholm presents the award. The names of people nominated for Nobel prizes remain secret for fifty years.
To learn about other winners of this year's Nobel prizes, listen Tuesday for the fifteen-minute program Science in the News.
This VOA Special English Economics Report was written by Mario Ritter. This is Bob Doughty.