The Nobel Prize for economics has been awarded to Americans Eugene F. Fama, Lars Peter Hansen and Robert J. Shiller for their work on the empirical analysis of asset prices.
The prize, awarded by the Swedish Riksbank in memory of Alfred Nobel, went to the scholars for their work on how the value of assets, such as stocks and bonds, vary over time.
The decision by the Nobel committee goes at the heart of the current macroeconomic debate over the crisis.
Eugene Fama, from the University of Chicago, showed that stock picks are extremely hard to predict in the short run and that new information is quickly incorporated into their prices. He is considered the father of the so-called “efficient market hypothesis”, a theory which has come under intense criticism following the huge swings observed in the stock market before and after 2008.
Robert Shiller, from Yale University, has found that stock prices fluctuate more than corporate dividends. The ratio of prices to dividends tends to fall when it is high and to increase when it is low.
Lars Peter Hansen, also from the University of Chicago, developed statistical methods that are suited to testing rational theories of asset prices.