The 2004 Nobel Prize in Economics

As all readers will probably know, the 2004 Nobel prize in economics was recently awarded to Finn E. Kydland and Edward C. Prescott, the official citation being “for their contributions to dynamic macroeconomics : the time consistency of economic policy and the driving force behind business cycles.” The main purpose of the discussion below will be to outline in more detail the nature of their contributions, which are often misunderstood, but before turning to that discussion I would like (admittedly because it pertains to my own school) to comment briefly on their intellectual pedigree