Americans Thomas Sargent and Christopher Sims have won the 2011 Nobel economics prize for research on the relationship between government policy decisions and the economy.

The Royal Swedish Academy of Sciences awarded the prize Monday to the two American professors “for their empirical research on cause and effect in the macroeconomy.” The prize committee said the winners developed methods for addressing questions such as how economic growth and inflation are affected by a temporary increase in the interest rate or a tax cut.

Sims said although his research and Sargent's was conducted in the 1970s and 1980s, he felt it was “essential to finding our way out of this mess” in the current global economy. Governments and central banks in Europe and the United States are struggling with policy to deal with serious economic problems including high debt, unemployment and slow growth.

The 68-year-old Sargent is a professor at New York University. Sims, who is also 68, is a professor at Princeton University. They carried out their research independently in the 1970s and 1980s, but the award citation said the methods developed by Sargent and Sims are essential tools in macroeconomic analysis today. They will share the approximately $1.5 million prize.

Monday's economics prize caps this year's Nobel announcements.

The economics prize is officially known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. It is not one of the original awards established in Nobel's 1895 will, but was created in 1968 by the Swedish central bank in his memory.