The two laureates will share the 10 million Swedish kronor (about $1.5 million) prize, Xinhua reported.
"The 2011 Sveriges Riksbank Prize in Economic Sciences in memory of Alfred Nobel has been awarded jointly to Christopher A. Sims and Thomas J. Sargent for their empirical research on cause and effect on the macroeconmy," Staffan Normark, Permanent Secretary of the Royal Swedish Academy of Sciences said.
Born in 1943, Sargent got his Ph.D from Harvard University in 1968 and is professor of economics and business at New York University.
Sims also obtained a Ph.D from Harvard University in the same year. He is professor at Princeton University.
The Nobel economics award, established in 1968 and officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, is the last of the six prizes announced this year. It was not part of the original crop of Nobel Prizes set out in Nobel's will.
This year's laureates have developed methods for answering many questions regarding the causal relationship between economic policy and different macroeconomic variables such as GDP, inflation, employment and investments, the Nobel committee said in a statement.
Sargent has shown how structural macroeconometrics can be used to analyse permanent changes in economic policy such as macroeconomic relationships when households and firms adjust their expectations concurrently with economic developments.
He has also examined the post-World War II era, when many countries initially tended to implement a high-inflation policy, but eventually introduced systematic changes in economic policy and reverted to a lower inflation rate, according to the statement.
Sims has developed a method based on so-called vector autoregression to analyse how the economy is affected by temporary changes in economic policy and other factors.
He and other researchers have applied this method to examine, for instance, the effects of an increase in the interest rate set by a central bank.
The Nobel committee said that although the two carried out their research independently, their contributions are complementary in several ways.
The laureates' seminal work during the 1970s and 1980s has been adopted by both researchers and policymakers throughout the world. Today, the methods developed by Sargent and Sims are essential tools in macroeconomic analysis, the committee said.
