Hall and Woodford win Nobel economics prize

American economists Robert E. Hall and Michael Woodford won the 2026 Nobel memorial prize in economics on Monday. The Royal Swedish Academy of Sciences in Stockholm cited their work "for microeconomic foundations of macroeconomic stabilisation". Hall teaches at Stanford University and Woodford at Columbia University. The academy said their models have improved governments' and central banks' ability to time fiscal and monetary policy so that booms and recessions are less severe.nobelprize

"The laureates' work has provided us with a stable theoretical foundation for the models that are now used by central banks and governments around the world," said John Hassler, who chairs the Committee for the Prize in Economic Sciences. "With them, we are better equipped to deal with shocks in the economy, such as energy crises or sudden changes in how much households consume".reuters+1

Woodford spoke to the committee by phone from New York. "It's a tremendous honor, it's a surprise," he said.cbsnews

Rebuilding Keynesian policy

The academy traced the work back to the oil crises of the 1970s. In that decade, Keynesian models stopped working: policy built on them brought uncontrolled inflation rather than lower unemployment, and some economists argued that stabilisation policy should be abandoned altogether. Hall and Woodford built new models from the bottom up instead. Older models relied on statistical links between aggregates such as inflation and output. The new ones start from how households and businesses decide about saving and pricing, and they assume those decisions look ahead. That means officials can steer the economy partly by announcing their plans in advance.nobelprize

The academy said the New Keynesian models that grew out of this research allow economists to explain and measure how stabilisation policy affects economic swings. Woodford is widely seen as a founder of modern monetary theory, and his 2003 book "Interest and Prices" has shaped central bank thinking for two decades, Il Sole 24 Ore reported. For decades Hall chaired the National Bureau of Economic Research committee that officially dates the start and end of U.S. recessions.news.sbs+1

The laureates and the prize

Hall was born in 1943 in Palo Alto, California. Woodford was born in 1955 in Chicopee, Massachusetts. Both earned their doctorates at the Massachusetts Institute of Technology, Hall in 1967 and Woodford in 1983. They will split the 12 million Swedish kronor prize, about $1.2 million, equally.reuters+1

The economics award is the last of this year's Nobel announcements. The prizes in medicine, physics, chemistry, literature and peace were announced last week. Sweden's central bank created the economics prize in 1968, and it was first awarded in 1969. It is not one of the five prizes set out in Alfred Nobel's will, but it is presented alongside them on Dec. 10, the anniversary of his death.apnews+1

Last year's prize went to Joel Mokyr, Philippe Aghion and Peter Howitt for their work on "creative destruction" and growth driven by innovation.reuters