STOCKHOLM, Oct 11: Finn Kydland of Norway and Edward Prescott of the United States won the Nobel economics prize on Monday for research that laid the groundwork for more independent central banks and explained business cycles.

"Their work has not only transformed economic research, but has also profoundly influenced the practice of economic policy in general, and monetary policy in particular," the Royal Swedish Academy of Sciences said in its citation.

"It is the greatest possible accolade. There is no doubt about that," Kydland told NTB news agency in Norway, where he is lecturing. Kydland, 60, shares the 10 million Swedish crown ($1.36 million) prize with Prescott, 63, who works at Arizona State University and the Federal Reserve Bank of Minneapolis.

Michael Crow, president of Arizona State University, praised Prescott's "great intellect, drive and commitment". In the late 1970s and early 1980s the two men transformed analysis which, with its focus on changes in demand like investment and household consumption, had been unable to explain the widespread phenomenon of "stagflation" - the combination of high inflation with no growth and high unemployment. -Reuters