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U.S. researchers Peter Diamond and Dale Mortensen, and British-Cypriot Christopher Pissarides have won this year's Nobel Prize for Economic Sciences for their work on how unemployment, job vacancies and wages are affected by government rules and policies.
Announcing the Award in Stockholm on Monday, the Royal Swedish Academy of Sciences said the trio developed a theory that answer the questions why are so many people unemployed at the same time that there are a large number of job openings, and how can economic policy affect unemployment.
On many markets, buyers and sellers do not always make contact with one another immediately. This concerns employers who are looking for employees and workers who are trying to find jobs. Since the search process requires time and resources, it creates frictions in the market. On such search markets, the demands of some buyers will not be met, while some sellers cannot sell as much as they would wish. Simultaneously, there are both job vacancies and unemployment on the labor market.
Diamond analyzed the foundations of search markets, while Mortensen and Pissarides expanded the theory and applied it to the labor market.
"Their models help us understand the ways in which unemployment, job vacancies, and wages are affected by regulation and economic policy," the Committee added.
The laureates' study concludes that more generous unemployment benefits give rise to higher unemployment and longer search times.
Search theory has been applied to many other areas in addition to the labor market. This includes, in particular, the housing market. The number of homes for sale varies over time, as does the time it takes for a house to find a buyer and the parties to agree on the price. Search theory has also been used to study questions related to monetary theory, public economics, financial economics, regional economics, and family economics.
President Barack Obama nominated him as a member of the U.S. Federal Reserve, but Senate rejected it. The White House re-nominated Diamond, but his nomination is pending clearance by the Senate Banking Committee.
The prize-money, worth 10 million Swedish kronor ($1.5 million), will be equally shared by the laureates. The Award also carries a gold medal and citation.
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No member state of the European Union recorded a government surplus in 2009, latest data from the statistical office Eurostat showed Friday.
The largest government deficits in percentage of GDP were recorded in Ireland and the U.K. In Ireland, the deficit was 14.4% of GDP and that in the UK at 11.4%. The lowest deficit was recorded in Luxembourg, at 0.7% in 2009.
The statistical office postponed the publication of figures for Greece to mid November as it is undertaking a process of quality assessment of statistical source data from public accounts, in cooperation with the Greek Statistical Office and the Greek Court of Auditors.
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U.K.'s sterling continued its strong rally versus most major currencies in early New York trading on Thursday and touched a fresh 5-week high of 1.5708 against the Swiss franc, 16-day high of 0.8706 against the euro, 9-day high of 1.5932 against the US dollar around 8:15 am ET.
If the pound strengthens further, likely target levels are seen at 0.8630 against the euro, 1.60 versus the US dollar and 1.5880 against the Swiss franc.
The pound also reversed its course after hitting a 2-day low against the yen in early trading and touched as high as 129.41 before holding steady around 8:15 am ET. On the upside, the UK currency may target resistance around the 130.30 level.
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New Zealand's economy is likely to show a weaker level of economic activity, the Treasury said in a monthly report on Monday. Weak spending growth in the third quarter, coupled with rises in goods prices point to growth in consumption falling short of Budget forecasts, it added.
Subdued consumption partly reflects the fortunes of the housing market. House sales fell 6.7% in September, translating into a 0.7% fall in the house price index.
Despite general weakness in data published in October, certain factors, such as high commodity prices, post-earthquake reconstruction in Canterbury and the Rugby World Cup are likely to support growth in 2011, the treasury noted.
"Nevertheless, the Half-Year Update forecasts, currently being prepared, are likely to show a weaker level of economic activity over the forecast period relative to Budget forecasts," the report said.
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Indonesia's exports value increased 22.70% year-on-year to US$12.08 billion in September, the Statistics Indonesia said on Monday.
On a monthly basis, exports dropped 12.07% in September. Non-oil exports recorded an annual growth of 25.18% during the month, while falling 13.66% from the previous month.
In the January to September period, the value of exports grew 38.27% to US$110.81 billion and non-oil exports increased 34.89% to US$91.83 billion.
Meanwhile, imports value increased 11.92% year-on-year to US$9.53 billion in September. From August, imports fell 21.69%. For the January to September period, the imports value rose 42.44% compared to the same period of the previous year.
Non-oil imports decreased 24.42% in September from the previous month, but imports grew 41.13% for the first nine months of the year.
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The Swiss franc extended its previous session uptrend against the euro and the US dollar in late European trading on Friday. At 5:10 am ET, the franc climbed to a 2-week high of 1.3524 against the euro and nearly a 3-week high of 0.9550 versus the greenback, which may be compared to Thursday's closing value of 1.3618 and 0.9586, respectively.
Against its British counterpart, the franc also spiked up further and hit a 10-day high of 1.5464 by about 5:10 am ET. Currently, the Swiss currency is trading near 0.9575 against the dollar, 1.3547 versus the euro and 1.5490 versus the sterling.
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The Greek economy contracted sharply between July and September, marking the ninth consecutive quarter of negative growth, figures showed on Friday.
The Hellenic Statistical Authority said GDP fell 1.1% compared to three months earlier. That was slower than the 1.5% fall forecast by analysts after the 1.7% drop in the June quarter.
The statistical office said investment and household consumption had the biggest negative influence on growth.
On a year-over-year basis, the Greek economy shrank 4.5%, compared to the 4% fall in the June quarter. Economists had predicted a 4.3% drop.
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Eurozone economic confidence rose to 105.3 in November from 103.8 in October, a survey from European Commission showed Monday. The expected reading was 104.9.
Sentiment in services rose markedly by 2.1 to 10.2 in November, which was the main contributor to the overall improvement. At the same time, confidence in industry improved to 0.9 points.
Further, confidence among consumers gained momentum in November. The reading was minus 9.4. Meanwhile, retailers' sentiment fell to minus 1.5 from minus 1.1.
Separately, the commission said business confidence rose to 0.96 from 0.91 in October. The level of the indicator now stays at its highest since December 2007, suggesting that the recovery in industry will continue in the months ahead.
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The dollar was mixed against other majors on Wednesday, as markets considered the Obama administration's deal to extend Bush-era tax breaks in return for another year of unemployment benefits.
While low taxes and more government spending may provide a lift to the floundering economic recovery, many are warning that the nation faces the wrath of bond markets unless it grapples with runaway deficits.
Europe has been forced to deal with its debt problems this year, as the specter of defaults in Ireland, Greece, Spain, and Portugal threatened the viability of the euro.
The dollar was steady near $1.32 versus the euro this morning. After hitting a 10-month low near $1.4300 in October, the buck improved to $1.2960 as Europe prepared a rescue of Irish debt late in November.
German exports recorded a surprise fall in October, suggesting the rising euro and waning global demand are starting to hurt firms in Europe's largest economy. Belying expectations for no change, exports dropped 1.1% month-on-month.
The dollar dropped against the sterling, hitting $1.5795.
British manufacturers expect production to rise solidly in the next three months on the back of strengthening demand at home and abroad, results of the latest monthly industrial trends survey conducted by the Confederation of British Industry showed Wednesday.
Meanwhile, the dollar rose to Y84.10 against the yen, staying away from a recent 15-year low of Y80.22.
U.S. mortgage applications declined slightly last week, following a huge drop the week before, according to a closely watched housing survey, according to the Mortgage Bankers Association's latest survey.
For the week ending December 3, the Market Composite Index, a measure of mortgage loan application volume, decreased 0.9 percent on a seasonally adjusted basis from one week earlier.
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The euro raced ahead against the dollar Tuesday morning, as Italian Prime Minister Silvio Berlusconi narrowly avoided a vote of no-confidence and German economic sentiment continued to rise.
The Mannheim-based Centre for European Economic Research or ZEW said its economic sentiment indicator for Germany climbed to 4.3 points from November's 1.8 points.
However, the euro fell from its early highs after a flurry of US economic data signaled the nation's recovery may be on a sustainable path.
Traders also re-assessed Berlusconi's slim victory as the sun came up in New York. The 11th hour win for the Italian PM may ensure political stability for a few months, but his ruling coalition has been severely damaged by the close vote.
The euro rose to a 3-week high of $1.3497 against the dollar, but dropped a penny from there amid the release of US data.
Retail sales in the U.S. increased by more than anticipated in the month of November, according to a report released by the Commerce Department on Tuesday, with the data likely to add to recent optimism about the holiday shopping season.
And the Labor Department released a report on Tuesday showing that total producer prices for November increased by more than economists had been expecting.
Boosted by energy costs, producer prices increased by 0.8 percent in November after rising by 0.4 percent in each of the two previous months.
The euro kept its gains versus the sterling after rising to a 2-week high of 0.85.
The single currency also remained firm against the yen, edging just above Y112 to its highest level in about three weeks.
Looking ahead, the Federal Reserve will announce its latest decision on interest rates at 2:15 pm ET. No change in rates is expected, but commentary on the nation's economy will be closely watched.
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