A British economist working in the United States has won the 2003 Nobel economics prize, the Royal Swedish Academy of Sciences said yesterday.
Clive Granger, who was born in Swansea and is a professor at a US university, will share the award and the 10 million crown (£800,000) prize with an American academic, Robert Engle. They were awarded the honour for separate ground-breaking discoveries that improved the way time series models were used to analyse economic data.
Mr Granger is the third Briton to pick up a Nobel prize this week. The physics prize on Tuesday went to Anthony Leggett for work on superconductivity. On Monday, Sir Peter Mansfield won the prize in physiology for discoveries leading to a technique that reveals images of the inner organs.
Mr Granger and Mr Engle came up with innovations that eliminate some of the errors that can occur in long-running time series for data such as GDP, inflation, interest rates and share prices. Their findings are important because in financial markets, random fluctuations and volatility can affect share prices and value, along with other financial instruments.
Mr Granger highlighted biases in economic models that were used right up to the 1980s to test theories, but which were liable to produce distorted results. "This difficulty was not well understood among model builders three decades ago," the Royal Swedish Academy of Sciences said in its citation. "This is no longer the case and Clive Granger can be credited with this change. "Granger has achieved [a] breakthrough... which has radically changed the way empirical models of macroeconomic relationships are formulated today."
Economists hailed the award for his theory, developed in the 1970s and 1980s and known as cointegration, saying it permanently changed the whole world of econometrics.
"It is very much deserved," said Professor Javier Hidalgo at the London School of Economics. "They opened a new world and new fields that are now applied by banks."
Mr Granger, 69, is emeritus professor of economics at the University of California in San Diego.Reuse content