I'd heard of both but was until yesterday extremely unaware of the work of either, barring a faint memory of having read something (by Robert Hall, perhaps) about Sargent's place on the freshwater - saltwater spectrum and knowing the full expansions of VAR and SVAR. So yesterday was a day of great education. It is noted that this was a prize for 'empirical macroeconomics' or even 'macroeconomic empiricism'. Everyone also made amply clear that as true blue empiricists, both Sargent and Sims hold views and have published papers that sit uneasy with almost all ideological and policy camps. I found that the theory and policy implications, as well as the historical context, were often more revealing than the sophistication of the techniques, which I'm ill equipped to comment on.
Tyler linked to two of Sargent's most influential papers (1, 2). While the broad takeaway from both seems to be that monetary policy and fiscal policy must usually act together for either to be really effective in a business cycle, it was interesting that Scott Sumner linked approvingly to a paper titled "Some Unpleasant Monetarist Arithmetic" which claims that monetary authorities may be powerless in managing the price level and open market operations may end up achieving the reverse of what they intend to. On reading the paper, you understand why - Sargent's paper is about the importance of expectations in general and uses ratex (though he doesn't assert or necessitate that ratex is the right way to model expectations). Sargent also uses definitions of 'tight money' and 'easy money' that belong to a different era and that Scott has completely disavowed. But I still find it a little bit of a cheat that Scott doesn't mention the government debt mechanism for this counterintuitive result (more on this later), nor does he so much as nod to the later introduction that this result may hold even in the short run and thus monetary policy effectiveness is fundamentally contingent on accommodation by fiscal policy.
Tyler also linked to this interview with Sargent that I did not enjoy much - he defended the 'state of modern macro' by essentially saying that macro researchers are more nuanced than they are being given credit for. This is true but it is a truism. Almost every academic worth talking about is more nuanced than popularly characterized - this does not tackle the basic substance of the critique. I also found it a bit disappointing that Sargent didn't subject his hypothesis on the Eurozone (pages 10,11 of 14) to his own strict empirical standards, otherwise he would have easily noticed that the default risks are better correlated with the size and volatility of the capital account surplus than the fiscal deficits. One interesting bit was when he talks about the Kareken-Wallace model of banks and bank runs as an alternative to the more popular Diamond-Dybvig. He compares the basic features, assumptions and gaps in both models and I recommend reading that section (pages 5,6 of 14) in detail. Noah Smith's take on Sargent is charming and well worth reading - he calls Sargent a 'badass' whose research sometimes proved too hot to handle for theorists who would have wanted him to side with them. (The last link is a rather damning indictment of Lucas & Prescott if meant in all seriousness and not as an exaggeration).
Update : There was a part on Chris Sims written earlier for this post. But as I kept discovering more while writing it, I realised it deserved a separate post.