Thomas J. Sargent

Winner of the 2011 Nobel Prize in Economic Sciences
Professor of Economics and Business at New York University

Nobel Prize-winning expert on the limits of policy — fiscal, monetary, and political.

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In the midst of today’s economic crisis, questions are flying thick and fast about the role of government policy and regulation. If you’re looking for answers, take a listen to Tom Sargent.

Tom just won the 2011 Nobel Prize in Economic Sciences for his pioneering work in macroeconomics over the last forty years. One of the founders of the rational expectations model and the freshwater economics movement, Tom is one of today’s most influential economists. He holds the W.R. Berkley Professorship of Economics and Business at New York University and is the author of many significant books and articles, including the classic economic textbooks, Macroeconomic Theory and Dynamic Economic Theory. He co-authored Rational Expectations Econometrics with 2013 Nobel Laureate Lars Peter Hansen.

The crucial insight behind rational expectations is this: people make decisions based on a reasonable mental model of the economy, and, crucially, based on their understanding of the government’s economic policies. This means that, since consumers and investors adjust their behaviors whenever the government shifts policies, these policies rarely have their intended effect. It’s an insight that revolutionized economics in the post-Keynesian era, and it continues to dominate economic thinking today.

Tom’s statistical insights are legendary, as are his warmth and sensitivity as a mentor. He can share both with you in his lectures. In such uncertain times, it’s good to have a guide — and Tom is one of the best.



Thomas J. Sargent and Lars Peter Hansen

The standard theory of decision making under uncertainty advises the decision maker to form a statistical model linking outcomes to decisions and then to choose the optimal distribution of outcomes. This assumes that the decision maker trusts the model completely. But what should a decision maker do if the model cannot be trusted?

Lars Hansen and Thomas Sargent, two leading macroeconomists, push the field forward as they set about answering this question. They adapt robust control techniques and apply them to economics. By using this theory to let decision makers acknowledge misspecification in economic modeling, the authors develop applications to a variety of problems in dynamic macroeconomics.

Technical, rigorous, and self-contained, this book will be useful for macroeconomists who seek to improve the robustness of decision-making processes.

Princeton University Press (October 29, 2007)


"The book is self-contained and rigorous and may be interesting not only for macroeconomists who seek to improve the robustness of decision making process but also for control engineers interested in different applications of their professional abilities."
— A. Swierniak, Zentralblatt MATH

Recursive Macroeconomic Theory

Lars Ljungqvist and Thomas J. Sargent

Recursive methods offer a powerful approach for characterizing and solving complicated problems in dynamic macroeconomics. Recursive Macroeconomic Theory provides both an introduction to recursive methods and advanced material, mixing tools and sample applications. The second edition contains substantial revisions to about half the original material, and extensive additional coverage appears in seven chapters new to this edition. The updated and added material covers exciting new topics that further illustrate the power and pervasiveness of recursive methods.Significant improvements to original chapters include a better treatment of the existence of recursive equilibria, an enhanced account of the supermartingale convergence theorem, and an extended treatment of an optimal taxation problem in an economy in which there are incomplete markets. Completely new coverage in the second edition includes an introductory chapter, which gives an overview of the themes uniting the diverse topics treated throughout the book. Two new chapters offer a self-contained account of the optimal growth model and some of its basic applications in macroeconomics and public finance. Other new chapters cover such topics as how to formulate and compute Stackelberg or Ramsey plans in linear economies, sustainable risk-sharing equilibria without commitment, and the application of recursive contracts to topics in international trade. Most chapters conclude with exercises and the book includes two technical appendixes covering functional analysis and control and filtering.

The MIT Press; 2nd edition (August 27, 2004)

The Big Problem of Small Change

Princeton Economic History of the Western World

Thomas J. Sargent

The Big Problem of Small Change offers the first credible and analytically sound explanation of how a problem that dogged monetary authorities for hundreds of years was finally solved. Two leading economists, Thomas Sargent and Franois Velde, examine the evolution of Western European economies through the lens of one of the classic problems of monetary history — the recurring scarcity and depreciation of small change. Through penetrating and clearly worded analysis, they tell the story of how monetary technologies, doctrines, and practices evolved from 1300 to 1850; of how the "standard formula" was devised to address an age-old dilemma without causing inflation.

One big problem had long plagued commodity money (that is, money literally worth its weight in gold): governments were hard-pressed to provide a steady supply of small change because of its high costs of production. The ensuing shortages hampered trade and, paradoxically, resulted in inflation and depreciation of small change. After centuries of technological progress that limited counterfeiting, in the nineteenth century governments replaced the small change in use until then with fiat money (money not literally equal to the value claimed for it) — ensuring a secure flow of small change. But this was not all. By solving this problem, suggest Sargent and Velde, modern European states laid the intellectual and practical basis for the diverse forms of money that make the world go round today.

This keenly argued, richly imaginative, and attractively illustrated study presents a comprehensive history and theory of small change. The authors skillfully convey the intuition that underlies their rigorous analysis. All those intrigued by monetary history will recognize this book for the standard that it is.

Princeton University Press (November 3, 2003)

The Conquest of American Inflation

Thomas J. Sargent

In the past fifteen years, inflation has been conquered by many advanced countries. History reveals, however, that it has been conquered before and returned. In The Conquest of American Inflation, Thomas J. Sargent presents a groundbreaking analysis of the rise and fall of U.S. inflation after 1960. He examines two broad explanations for the behavior of inflation and unemployment in this period: the natural-rate hypothesis joined to the Lucas critique and a more traditional econometric policy evaluation modified to include adaptive expectations and learning. His purpose is not only to determine which is the better account, but also to codify for the benefit of the next generation the economic forces that cause inflation.

Sargent begins with an explanation of how American policymakers increased inflation in the early 1960s by following erroneous assumptions about the exploitability of the Phillips curve — the inverse relationship between inflation and unemployment. In subsequent chapters, he connects a sequence of ideas — self-confirming equilibria, least-squares and other adaptive or recursive learning algorithms, convergence of least-squares learners with self-confirming equilibria, and recurrent dynamics along escape routes from self-confirming equilibria. Sargent synthesizes results from macroeconomics, game theory, control theory, and other fields to extend both adaptive expectations and rational expectations theory, and he compellingly describes postwar inflation in terms of drifting coefficients. He interprets his results in favor of adaptive expectations as the relevant mechanism affecting inflation policy.

Providing an original methodological link between theoretical and policy economics, this book will engender much debate and become an indispensable text for academics, graduate students, and professional economists.

Princeton University Press (January 1, 2001)

Rational Expectations and Inflation

Thomas J. Sargent

This collection of essays written by one of the founders and chief proponents of rational expectations theory is intended as a supplement for macroeconomics courses. Thomas Sargent applies rational expectations macroeconomics at an informal, non-econometric level to interpret a variety of historical and contemporary issues. Sargent uses inflation as a natural context for applying rational expectations theory. Government efforts to stop currency depreciation, alternative monetary systems and the conflict between monetary and fiscal policies are also explored.

Harpercollins College Div; 2 Sub edition (January 1993)

Macroeconomic Theory

Second Edition

Thomas J. Sargent, Steve Heller (Editor)

Macroeconomic Theory", in its first edition, was widely adopted for use as a graduate text; this updated and expanded version should find even greater popularity as a text and as a research reference. It has been substantially revised to include three entirely new chapters: The Consumption Function, Government Debt and Taxes, and Dynamic Optimal Taxation. Significant additions have been made to three of the original chapters dealing with difference equations, stochastic difference equations, and investment under uncertainty.

Emerald Group Publishing Limited; 2 edition (November 28, 1987)

Dynamic Macroeconomic Theory

Thomas J. Sargent

The tasks of macroeconomics are to interpret observations on economic aggregates in terms of the motivations and constraints of economic agents and to predict the consequences of alternative hypothetical ways of administering government economic policy. General equilibrium models form a convenient context for analyzing such alternative government policies. In the past ten years, the strengths of general equilibrium models and the corresponding deficiencies of Keynesian and monetarist models of the 1960s have induced macroeconomists to begin applying general equilibrium models.

This book describes some general equilibrium models that are dynamic, that have been built to help interpret time-series of observations of economic aggregates and to predict the consequences of alternative government interventions. The first part of the book describes dynamic programming, search theory, and real dynamic capital pricing models. Among the applications are stochastic optimal growth models, matching models, arbitrage pricing theories, and theories of interest rates, stock prices, and options. The remaining parts of the book are devoted to issues in monetary theory; currency-in-utility-function models, cash-in-advance models, Townsend turnpike models, and overlapping generations models are all used to study a set of common issues. By putting these models to work on concrete problems in exercises offered throughout the text, Sargent provides insights into the strengths and weaknesses of these models of money. An appendix on functional analysis shows the unity that underlies the mathematics used in disparate areas of rational expectations economics.

This book on dynamic equilibrium macroeconomics is suitable for graduate-level courses; a companion book, Exercises in Dynamic Macroeconomic Theory, provides answers to the exercises and is also available from Harvard University Press.

Harvard University Press (February 1987)


Tom tailors each presentation to the needs of his audience and is not limited to the topics we have listed below. These are subjects that have proven valuable to customers in the past and are meant only to suggest his range and interests. Please ask us about any subject that interests you; we are sure that we can accommodate you.

The economics and politics of U.S. monetary and fiscal choices

Macroeconomic policy, bank regulation, and monetary policy

Episodes of U.S. monetary and fiscal history that shed light on global situations today

The conceptual and policy issues underlying the Euro crisis


Princeton News Conference with Nobel Prize in Economics Winners


An international customs committee:
Your insightful presentation was extremely well received and much appreciated by all delegates. Let me state it was our honor to host such a distinguished guest as you.



The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2011 was awarded jointly to Thomas J. Sargent and Christopher A. Sims "for their empirical research on cause and effect in the macroeconomy"

— The Wall Street Journal
— The New York Times