2026 Nobel Prize in Economics awarded to Robert Hall and Michael Woodford

The Royal Swedish Academy of Sciences announced on Monday that American economists Robert E. Hall and Michael Woodford received the 2026 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for creating macroeconomic models that significantly enhance policymakers’ ability to stabilise economies in times of boom and recession.

The academy highlighted that the laureates’ work established a stronger theoretical basis for fiscal and monetary policies, allowing governments and central banks to better handle economic fluctuations through timely interventions.

Robert Hall from Stanford University and Michael Woodford from Columbia University reconstructed macroeconomic models by grounding them in microeconomic behaviours, examining how households and businesses make decisions that collectively impact the broader economy.

This research emerged in response to critiques of traditional Keynesian models after the 1970s oil shocks, when many developed nations faced high inflation, sluggish growth, and increasing unemployment.

The Nobel Committee emphasised that Hall and Woodford demonstrated how to reform macroeconomic models to rebuild trust in stabilisation policies by integrating forward-looking behaviour among consumers and firms.

A core aspect of their models is the assumption that households and companies consider future economic conditions when deciding on spending, saving, investment, and pricing.

Consequently, policy signals from governments and central banks can shape expectations and guide economic activity effectively.

The academy noted these models have been widely adopted by central banks and governments globally and have proven useful in managing economic downturns and external shocks.

John Hassler, Chair of the Committee for the Prize in Economic Sciences, stated, “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.”

He added that these models have enhanced policymakers’ responses to disruptions such as energy crises and sudden changes in household consumption.

Robert E. Hall, born in 1943 in Palo Alto, California, earned his PhD from the Massachusetts Institute of Technology in 1967 and teaches at Stanford University.

Michael Woodford, born in 1955 in Chicopee, Massachusetts, received his PhD from the Massachusetts Institute of Technology in 1983 and is a professor at Columbia University in New York.

Alongside the honour, the prize carries a monetary award of 12 million Swedish kronor, which will be equally divided between the two economists.