Robert Hall and Michael Woodford win 2026 Nobel economics prize

The 2026 Nobel memorial prize in economics has been awarded to American economists Robert E. Hall and Michael Woodford for developing models that help governments and central banks stabilize economies during downturns and other shocks.

The Royal Swedish Academy of Sciences honored the pair “for microeconomic foundations of macroeconomic stabilization.” Hall is a professor at Stanford University, while Woodford is a professor at Columbia University. They will share the 12 million Swedish kronor ($1.2 million) award.

Their research rebuilt macroeconomic stabilization models around the decisions and expectations of individual households and businesses, rather than relying primarily on historical statistical relationships among broad measures such as inflation, production and consumption. Traditional Keynesian models had struggled to explain the combination of high inflation, unemployment and weak growth during the oil shocks of the 1970s.

The resulting New Keynesian models allow policymakers to analyze how fiscal and monetary measures affect business cycles. They have also supported tools such as central-bank communication about the likely future course of interest rates, known as forward guidance, which was used extensively after the 2008 financial crisis.

“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,” prize committee chair John Hassler said. He added that the models improve policymakers’ ability to respond to shocks including energy crises and abrupt changes in household consumption.

Formally called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, the award was established by Sweden’s central bank and first presented in 1969.