US economist Edmund S Phelps won the 2006 Nobel Economics Prize yesterday for work on tradeoffs in macroeconomic policy, the Nobel jury said, noting 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

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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 (1.07 million euros, 1.37 million dollars).

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 inventorAlfred 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.

The Medicine Prize went to US research duo Andrew Fire and Craig Mello for their discovery of how to silence malfunctioning genes, a breakthrough, which could lead to an era of new therapies to reverse crippling disease.

The Physics Prize went to US space scientists John Mather and George Smoot on Tuesday for a pioneering space mission, which supports the "Big Bang" theory about the origins of the universe.

Roger Kornberg of the United States won the Chemistry Prize for work on a key process of life called genetic transcription, building on Nobel prizewinning discoveries by his own father.

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 ofAlfred Nobel.