US economist Edmund S Phelps has won the 2006 Nobel Economics Prize for work on trade-offs in macroeconomic policy, the Nobel jury said.
The jury noted that his work had improved understanding of how policy affected welfare for present and future generations.
His work has 'deepened our understanding of the relation between short-run and long-run effects of economic policy' and has had 'a decisive impact on economic research as well as policy', the jury said.
Phelps, 73, is a professor of political economy at Columbia University in New York.
His research has shown that although full employment, stable prices and rapid growth are central goals of economic policy, trade-offs sometimes need to be made between the consumption of current and future generations.
'He has emphasised that not only the issue of savings and capital formation but also the balance between inflation and unemployment are fundamentally issues about the distribution of welfare over time,' the Nobel committee said.
Phelps will take home the prize sum of 10 million kronor (€1.07m).
The Nobel Economics Prize, the fourth of the six coveted prizes to be awarded this year, is the only one not originally included in the last will and testament of the creator of the awards, Swedish inventor Alfred Nobel.
It was created by the Swedish Central Bank in commemoration of its tricentenary in 1968, and was first awarded in 1969. It is also funded by the bank.
The prizes for Medicine, Physics and Chemistry were awarded last week. The Literature Prize will be announced on Thursday and the Peace Prize on Friday.
This year's Nobel laureates will receive their prizes at official ceremonies held in Stockholm and Oslo on December 10, the anniversary of the death in 1896 of Alfred Nobel.
