This year’s winners of the Nobel Prize in economics have played key roles in developing what we now call modern macroeconomics. But we wouldn’t blame Thomas Sargent and Christopher Sims if they feel less than fully welcome these days in the field they helped to shape.

Consider Mr. Sargent’s influential work on rational-expectations models. According to this theory, people do not respond passively to changes in economic policy or circumstances. They anticipate future conditions and adjust according to their best interests.

As Mr. Sargent, who teaches at New York University and is a fellow at the Hoover Institution, has put it: “The concept of rational expectations asserts that outcomes do not differ systemically (i.e., regularly or predictably) from what people expected them to be. The concept is motivated by the same thinking that led Abraham Lincoln to assert, ‘You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time.’ . . . [Rational expectations] does not deny that people often make forecasting errors, but it does suggest that errors will not persistently occur on one side or the other.”

This means it is hard for politicians to manipulate people into behaving in ways that don’t make economic sense. One implication is that loose monetary policy cannot permanently lower unemployment because people will anticipate higher future inflation and demand higher wages and interest rates in compensation. Likewise, temporary fiscal stimulus won’t change consumer spending permanently because it doesn’t change underlying wealth or income.

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Paul Gigot and Dan Henninger on the Nobel Prize in Economics winners and this week’s GOP debate.

The rational-expectations school was supposed to have been discredited by the 2008 panic, with the conventional wisdom saying that it was a lesson in market failure and the need for government intervention. The mania and panic of the 2000s certainly were a reminder that markets sometimes overshoot, especially when prodded by government subsidies for credit. We also know many investors who have become very rich betting not on fundamentals but on the occasional madness of crowds.

Yet markets also inevitably correct, as new information is absorbed. And as we move further from the subprime meltdown, the wisdom of rational expectations is once again asserting itself. The failure of the “temporary, targeted” Keynesian agenda to restore growth has become obvious.

A professor at Princeton, Mr. Sims is best-known for his mathematically elegant work on methods for interrogating macroeconomic data. He has been an active proponent of the “fiscal theory of the price level,” which suggests that consumer prices aren’t merely determined by the money supply. The public fisc matters too. A persistent government budget deficit can cause run-ups in the price level because of the inflationary measures that governments are tempted to take to finance their liabilities.

Yet Mr. Sims has also argued that the powers of central banks are limited. “Monetary policy,” he said in a 2007 interview, “is not as important as many people have thought in generating business cycles.” The irrational expectation that so many have placed for three years on near-zero interest rates to conjure a recovery would seem to validate his point.

With this year’s picks, the Royal Swedish Academy of Sciences upholds its reputation of being less cloistered and distant from reality than some of the other Nobel selectors. It may well be a sign of the times that the Academy selected two economists so at odds with the recent Keynesian vogue, and in tune instead with the frustration with government fine-tuning that has dominated world economic policy since 2008.

Asked yesterday what he would do with his half of the $1.5 million prize money, Mr. Sims said: “First thing I’m going to do is keep it in cash for a while and think.” Good advice, not least for our political class.

Printed in The Wall Street Journal, page 13

By DENNIS NISHI

If you’ve been laid off and your former employer is hiring again, you might see the news as a chance to get back to work at your old firm. But first it’s important to consider whether it’s a good idea—and whether the skills you bring are what the company needs now.

The odds of getting an old job back are good if you were let go simply for budgetary reasons and the company outlook has been improving.

But before you get too excited about trying to return, do a self-assessment—and be honest. “Sometimes there is some selectivity in who is laid off,” says Jerald Jellison, a professor of social psychology at the University of Southern California who specializes in the workplace. He recommends asking yourself whether you created any bad feelings when you left or while you were working at the company. Was your work up to par? Was your role valued in better economic times?

You also should consider whether or not you feel a renewed commitment to the work you’d be doing, says Mr. Jellison. “I liken it to returning to an old flame. Is it really a good idea? Do you really want to be there?”

What the Company Needs

Next, consider what the company will need as conditions improve. If you were a marketing manager, figure out how you could return with a new angle of attack that could help make the company more competitive. If you’ve enrolled in any courses or have time to sign up for a webinar that will bump up your skills, highlight these efforts in a cover letter.

Keep in mind that even if your old firm is starting to rebuild and your position—something like it—is resurrected, you might not get the job. Approach the application process and interview as if you were a new candidate. Fine-tune your résumé, do research that shows you haven’t fallen behind on what the company has been doing, prepare for the interview and be ready to answer tough questions.

And before you apply, contact former co-workers who have kept their jobs to assess how things are now relative to when you were there. Get up to speed on any other news that can help you understand key personnel changes or staffing needs, says Ruth K. Liebermann, managing director of HR Insourcing in Boston. “Contact your former boss and let him [or her] know that you’re interested,” says Ms. Liebermann. “Tell your boss what new initiatives you plan to bring, with the benefit of hindsight, and what new energy you have coming back.”

No Grudges

When you contact your former boss or human-resources department, assure them that you harbor no bad feelings about being laid off and are eager to return to work. If you’re trying to persuade a new boss to bring you back, focus on your accomplishments and get references to back up your claims.

If there are no full-time positions available, consider asking to work on a contract basis. The pay is often higher and, though there are no benefits, the job may eventually transition into a full-time position.

Don’t be discouraged if you get through the interview process and find out the job now pays less than you earned before. “You have to consider the market conditions,” says Paul Glen, a management consultant in Los Angeles. “Everybody is taking pay cuts and losing benefits. That will change as the economy improves.”

Write to Dennis Nishi at cjeditor@dowjones.com

By JOE LIGHT

The job market for business- school students is better than last year, but still isn’t back to prerecession levels, says Nicole Hall, president of the MBA Career Services Council, a professional association.

Driving the pickup is more robust recruiting by companies in health care, energy and technology, she says. Yet compared with a few years ago, a smaller percentage of students are getting multiple offers, and companies are recruiting closer to home to save money. That has led candidates to be more open to employers they might not have otherwise considered.

Lingering weakness means some graduates from the class of 2010 still hadn’t found jobs a few months after graduating.

According to a September survey of 824 business-school graduates from around the world, 88% of M.B.A. and other graduate management alumni from the class of 2010 had a job, a slight increase from 84% of the class of 2009 a year earlier, according to the Graduate Management Admission Council.

T. Rowe Price Chief Economist Alan Levenson gives his unemployment outlook for 2011 and predicts areas of potential job growth for the U.S. economy. He also gives Dow Jones’ Veronica Dagher his view on the odds of another quantitative easing program by the Fed.

Starting pay rose to a median of $78,820 this year from $75,000 for the class of 2009, according to the Graduate Management Admission Council survey.

Ms. Hall, who is also career services executive director for the Graziadio School of Business and Management at Pepperdine University, recently spoke to The Wall Street Journal.

Excerpts:

WSJ: At business schools overall, are employers recruiting M.B.A. candidates more aggressively this year?

Ms. Hall: We still see companies are conservative with hiring and not equal across all industries. But overall, hiring appears to be up. It’s still dramatically down from 2007 and 2008. Back then, employers were engaging earlier on, and I’d have a full recruiting calendar. We’re nowhere near where we were in the past.

WSJ: What sectors seem to be more keen to hire this year?

Ms. Hall: With the class of 2010, we saw a strong trend. There was a big increase in hiring in health care, energy and technology. Those areas increased in 2009 too, but that trajectory continued this year. I expect the same will happen with the class of 2011.

WSJ: Have consulting and financial services come back yet?

Ms. Hall: It’s been consistent across most schools that they’re still down compared to before the recession. We’re certainly seeing a higher volume of activity than last year, but they’re being very conservative with hiring estimates.

WSJ: How have schools dealt with the lack of opportunities?

Ms. Hall: There’s a decrease in the number of opportunities that companies have available overall. In the past, a lot of schools were accustomed to getting multiple hires from one employer, but now in a lot of cases, a company will only make a single hire. So that makes it highly competitive.

Schools that had existing relationships with companies had the ability to hold onto those relationships for hiring opportunities for their students. It’s been harder for schools that didn’t have them, since companies have focused on schools where they’ve already gotten candidates with proven success.

WSJ: Are companies focusing on top-tier schools?

Ms. Hall: There’s not as much national recruiting as before. A lot of companies are focusing on high quality schools that are right in their backyards. All schools, no matter how high the rank, try to diversify their base of employers, but companies right now want to recruit in their immediate regions. It saves them a lot of money on their recruiting budgets.

WSJ: How are students adjusting?

Ms. Hall: Back in 2007 and 2008, students had flexibility to decide where they wanted to live and work. With outlooks tightening, students will take opportunities wherever they’re available.

The classes of 2010 and 2011 had the benefit of seeing the downturn happening as they moved through school. So they’re not surprised like the class of 2009. They know that the number of offers per student has declined. At Pepperdine, probably 30% of students have gotten multiple offers during this downturn. Before, many more would have.

WSJ: Are there still 2010 grads looking for work?

Ms. Hall: Job acceptances are coming later [because some students are taking longer to accept offers they don't consider ideal]. Before, we’d expect to see acceptances within three months of graduation, but now it’s happening as late as six months after. At Pepperdine, there are a handful of 2010 graduates still looking for jobs.

WSJ: Has your role as a career services director changed?

Ms. Hall: We’re much more like headhunters. We’re aggressively matching students to roles. We’ll find out what companies need and recommend students to companies that fit. Companies like it, because they get four or five pre-screened candidates to consider for their opening.

We also profile the graduating class each year on their skills and interests and pursue companies that would have roles for them.

So rather than expand our overall company relationships, we do it strategically based on what our students need.

Welcome to the executive suite. But beware: Your smallest acts can cause big consequences.

Consider Linda Parker Hudson, promoted last fall to run the U.S. arm of BAE Systems PLC, a global defense giant.

She told her top lieutenants that she expected “rapid responses” to email around the clock. To her surprise, several started sleeping beside their beeping BlackBerry so they could answer her 3 a.m. messages right away.

Ms. Hudson says she repeatedly reassured these colleagues that they could sleep at night and tried to lessen her nocturnal BlackBerry use. But “it was probably a few months before we all got used to each other,” she concedes.

BAE Systems

Linda Parker Hudson of BAE Systems

Ms. Hudson experienced “executive amplification,” a widespread phenomenon that can significantly affect your career. When you land a senior post, staffers constantly will scrutinize — and possibly misconstrue – your deeds, dress and words.

Yet power makes you “less aware that your behavior matters,” cautions Adam Galinsky, a professor of organizational behavior at Northwestern University’s business school. “That can be a career killer by demoralizing your troops.” Even lack of eye contact with them as you walk down the hall conveys your disapproval, risking alienation.

Amplification also can work to your advantage because effective, small moves often improve employee motivation. You must recognize that “leadership is a role, and you are always on,” says Gary Bradt, an executive coach in Summerfield, N.C. “Make sure you send the messages that you want to send.”

Ms. Hudson first saw the downside of the amplifier effect when she became the first female division president for General Dynamics Corp. in 1999. During her first week, she wore a new scarf tied in a fancy bow. The next day, she ran into more than a dozen women there wearing scarves tied the same way.

Being watched so closely frightened Ms. Hudson. “I wasn’t accustomed to being the center of attention,” the 60-year-old executive recalls. “I felt like I was up on a billboard.”

She soon found herself closely scrutinized again. Touring a division factory months later, Ms. Hudson noticed flyers posted everywhere. They displayed her photo and list of leadership expectations from a recent management team speech.

Thanks to the unanticipated flyers, Ms. Hudson says she realized that amplification represents a potentially positive tool. “You can change employee behavior by subtle changes in your behavior,” she explains.

Anton Rabie, president and co-chief executive of Spin Master Ltd., a toy maker, uses a minor symbolic gesture to amplify his deep commitment to taking risks. He mounts failed Spin Master products and misguided mock-ups on a wall of his Toronto office.

“Each one has a lesson that we should remember,” observes Mr. Rabie, who launched the manufacturer with two classmates in 1994. Staffers viewing his flop-filled wall know “it’s okay to make mistakes,” he continues. “It’s like walking the talk.”

You may also reap benefits from executive amplification by seeking frequent feedback – and making needed corrections. Easier said than done, however.

“As you rise in the ranks, people stop telling you what they should tell you,” notes Richard A. Davis, a partner at RHR International, an executive-coaching firm, and author of the new book. “The Intangibles of Leadership.”

He advocates creating a personal board of directors to help identify your blind spots. “They have to know you and the people around you,” but work elsewhere than your employer, Dr. Davis recommends.

A performance review known as 360-degree feedback persuaded a newly promoted executive at a multinational apparel concern to alter her misinterpreted appearance, according to Rosemarie Fiorilli, a New York executive coach who advised her this year. The 360-degree process involves anonymous input from peers, subordinates and superiors.

The executive wore designer duds, including luxury-brand jewelry, at a workplace that favors business casual dress, Ms. Fiorilli says.

During 360-degree interviews, co-workers said, “She’s trying to be better than us,” the coach recollects. “She was the only one who didn’t know this was bothering people.”

Ms. Fiorilli says she warned the executive that the amplified impact of her luxurious look was hurting her group’s cohesiveness. The woman “toned it down immediately,” the coach adds. “Her boss said other people had noticed and remarked favorably.”

An associate’s frank feedback taught Tim Rice a different amplification lesson. While chief operating officer of Moses Cone Health System in Greensboro, N.C., he visited a friend seated in a chair two days after she underwent open-heart surgery at one of its five hospitals.

Mr. Rice teased her nurse for leaving the woman “in this chair all day long” because the patient looked tired. His joke devastated the nurse, “and she cried afterward,” the nursing director told Mr. Rice.

He later apologized to the nurse and in front of nearly 150 colleagues, praised the nursing director’s candor. Actually, “I was really afraid to come tell you,” she replied.

Mr. Rice says he concluded that his high-level title intimidated subordinates, and he should avoid sarcasm “because everything we do is amplified.” He took charge of Moses Cone in 2004. But “I am probably not as open and free and goofy as I have been in the past.”

At the same time, Mr. Rice regularly encourages his team members to suggest ways that he might lead the health-care system better. “I always say, ‘Who is going to tell the CEO that his fly is unzipped?”’

Write to Joann S. Lublin at joann.lublin@wsj.com

By ELIZABETH GARONE

When Jon Burke decided earlier this year to look for a new job, he updated his LinkedIn profile with a new executive summary and up-to-date bullet points highlighting his recent accomplishments.

He hoped the changes would be enough of a signal to recruiters that he was serious about making a change and was someone worth contacting. He also hoped the changes were subtle enough not to arouse the suspicion of his coworkers or supervisors, he says.

Greg Hargreaves

He also wanted to make sure his profile was consistent and up-to-date with his résumé. Stealth job hunting while employed has never been easy. But in today’s workplace—where offices are more open and pressured managers more regularly check in with employees—it can require a Herculean effort by professionals. Plus, job seekers are often strapped with the workload of two or three people after the layoffs of the past two years. Still, savvy job hunters and career experts say there are a number of creative and traditional ways to ease the burden.

“In this market, having a profile on LinkedIn doesn’t necessarily mean you’re looking,” says Mr. Burke. Unlike wearing an interview suit to work, using such websites isn’t a clear sign of job hunting, since many people use these portals as part of their job. For Mr. Burke, who uses the site daily as a sales tool, it was the easiest way to search for a job without being too obvious.

After Mr. Burke, then employed by at NetSuite in San Mateo, Calif., made the changes to his profile, he says he was contacted on a regular basis by recruiters. He’d respond via LinkedIn to ask what they had to offer. Mr. Burke was able to quiz the recruiters almost exclusively through email. “I was very picky,” he says. “I … couldn’t afford to waste my time.”

For Mr. Burke, not using an online profile would have required a bigger investment of time. “It would have been much more labor intensive,” he says, recalling the “nightmare” of looking for work in 2003 when he used Monster.com and Craigslist to search for jobs. “It’s like having a second job at night, and you’re hoping people call you back. This way, people are calling you.”

Professional networking websites like LinkedIn are becoming particularly popular to recruiters who often have specific needs to fill when hiring. “Eighty-five percent of recruiters use LinkedIn to find talent,” says Connie Thanasoulis-Cerrachio, a career services expert with Vault.com and a former Fortune 500 recruiter. “It’s a completely passive job search tool.” To give yourself the best edge over the competition, make sure that any online profiles you have are up-to-date and complete, she says.

John Phillips, the director of Global Talent Labs at Microsoft Corp., says that one of the first places his recruiters look is networking sites and LinkedIn in particular to find candidates. “Your profile serves just like your résumé would,” he says. “If you’re not there, you would just be missing out on being found.”

Another way job hunters are keeping their job searches secret is through meetings at odd times. Stephen Miles, vice chairman of executive search firm Heidrick & Struggles International Inc. says those doing the hiring will make the time to see a desirable candidate, even it’s outside business hours.

But don’t be too restrictive when suggesting times, Mr. Miles recommends. “Give the person on the other end a lot of options,” he says, offering some time slots before work and after. For his part, Mr. Miles, says he has held meetings as early as 6:30 a.m. and as late as 11 p.m. to accommodate candidates.

Mr. Burke eventually accepted a national sales position with PanTerra Networks, a technology start-up in Sunnyvale, Calif. after five rounds of interviews. For his first one, which was with the CEO, Mr. Burke suggested a 7 a.m. breakfast meeting in order to avoid having to leave work in the middle of the day. Subsequent rounds took place over lunch and dinner, also at Mr. Burke’s request.

For job hunter Toni Unrein, a former executive-level recruiter for Washington Mutual, finding the time to research the companies that interested her was too time-consuming. So she has outsourced the work to a virtual assistant in India through Elance.com. For $8 an hour, the assistant, a former financial analyst with an M.B.A., researches business models, executive bios, and the past year’s most significant press releases on the companies Ms. Unrein assigns him. “It gives you time to focus on what’s important, like the strategic information,” says Ms. Unrein. “What are the potential problems? Where is the company headed?”

She also uses the assistant to do research for interviews and says he has done great work. “It’s as if he were interviewing himself,” says Ms. Unrein, who has yet to land a job.

Recruiters say outsourcing research is a tactic they’re seeing more often, and some recommend it to their clients.

Even networking now can be done on the sly online. When Kevin Nichols, a paralegal, saw signs the San Francisco law firm he worked for would have layoffs, he knew he needed to make new connections in order to find a new job. But his office was close enough to his boss’s office that his phone calls could be heard and it would be obvious if he left the office in the middle of the day.

Mr. Nichols had already started an-in-person professional networking group that met regularly in downtown San Francisco. So in 2008, he brought it online by making it a LinkedIn group limited to locals. Today, the group has 1,200-plus members. “If I had to meet each time to make a connection, it would slow things down a lot,” says Mr. Nichols, who was laid off and later found a legal sales position through a former colleague.

Write to Elizabeth Garone at cjeditor@dowjones.com

By JOE LIGHT

To make one hire, recruiters wade through more than six times as many applications from job boards than they do from their own websites, according to an analysis of hiring data by Jobs2web Inc., which helps companies track the sources of applicants and hires.

According to the analysis, companies look through about 219 applications per job from job seekers who discovered the posting on a major board, such as Monster.com or CareerBuilder.com, before finding someone to hire, compared with 33 applications per hire from job hunters who find the job on the company’s own career site and 32 per hire when a job seeker types the job they are looking for into a search engine.

Someone who is browsing on a job board might bump into many jobs that he thinks he might have an outside shot of getting, said Jobs2web chief financial officer Steve Shaffer.

On the other hand, someone who searches for a specific job on a search engine or decides to look at a certain company’s website probably has more relevant experience, he said.

“The fewer applicants you need to go through, the better,” he said.

There were about 116 applicants from social-media sites, like Facebook.com and Linkedin.com, for every one that was hired.

Even though job boards are more crowded, they remain a major source of hiring for many firms, noted Gerry Crispin, co-founder of CareerXroads Inc., a consulting firm. A January CareerXroads study found that about 25% of hires of external candidates came through job boards.

Still, for job seekers, getting a referral from an employee is far and away the best way to get noticed by a recruiter, Mr. Crispin said. CareerXroads found that recruiters made one hire for about every 10 referrals they received.

“It increases your chances of getting a job tenfold. If an employee makes a referral, they at least have some feeling that the individual will be a better employee,” he said.

The Jobs2web analysis included 1.3 million applications and 26,000 hires in 2010.