Robert E. Hall and Michael Woodford are named as recipients of the 2026 Economics Nobel Prize. (Img: X)
Stockholm: American economists Robert E. Hall of Stanford University and Michael Woodford of Columbia University have been awarded the 2026 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for their research into the microeconomic foundations of macroeconomic stabilisation, which has strengthened the theoretical basis for governments and central banks to respond to economic fluctuations.
The Royal Swedish Academy of Sciences announced the award on Monday, October 12, recognising the economists for developing analytical frameworks that have helped policymakers design more effective fiscal and monetary interventions to moderate economic downturns and prevent excessive overheating during periods of expansion.
The award-winning work addresses a fundamental question in economics: how can governments and central banks reduce the severity of economic booms and recessions?
Traditional macroeconomic models often relied on statistical relationships between broad indicators such as inflation, output and consumption. Hall and Woodford helped advance an approach that builds economic analysis on the decisions made by individual households and businesses, offering a more comprehensive understanding of how these decisions collectively shape the wider economy.
Their research demonstrates how incorporating individual behaviour and expectations into macroeconomic models can improve the design and timing of stabilisation measures. These insights have contributed to the theoretical frameworks used to assess policy interventions in response to economic shocks.
Economic activity naturally moves through periods of expansion and contraction. Governments and central banks seek to moderate these fluctuations through fiscal measures, including taxation and public expenditure, as well as monetary instruments such as interest-rate adjustments.
The laureates' work has helped explain how these interventions can be structured to influence economic decisions and reduce instability. During a downturn, policy measures may support demand and employment, while excessive economic expansion may require steps to contain inflationary pressures.
The Academy noted that their research has provided a robust theoretical foundation for stabilisation models used by policymakers worldwide, improving their capacity to respond to disruptions such as energy crises and sudden changes in household consumption.
Robert E. Hall is a professor at Stanford University in California, while Michael Woodford serves as the John Bates Clark Professor of Political Economy at Columbia University in New York.
The recognition acknowledges the contribution of their research to modern macroeconomic theory and its application in policy formulation. Their work has helped bridge the gap between the economic choices of individuals and businesses and the broader objectives of maintaining stable output, employment and prices.
The 2026 award carries prize money of 12 million Swedish kronor, which will be divided equally between the two recipients. Formally known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, the economics award was established by Sweden's central bank in 1968 and was first presented in 1969. Although it is not one of the original prizes instituted under Alfred Nobel's will, it is awarded alongside the Nobel Prizes.
