Hall and Woodford awarded Nobel Prize for economic stabilisation models

Robert E. Hall of Stanford University and Michael Woodford of Columbia University have been awarded the 2026 Nobel Memorial Prize in Economic Sciences by the Royal Swedish Academy of Sciences. The academy recognised their development of microeconomic models that help governments and central banks stabilise economies against external shocks such as energy crises. According to the academy, their work provides the theoretical foundation now used by central banks across the world, helping them to 'smooth out the economy's peaks and troughs.'

Rather than analysing only macroeconomic measures like inflation and overall output, Hall and Woodford grounded their research in microeconomics. They examined how individual households and businesses make forward-looking decisions about savings, spending and pricing. John Hassler, chair of the prize committee, explained that their research leaves policymakers 'better equipped to deal with shocks in the economy, such as energy crises or sudden changes in how much households consume.'

Hall was born in Palo Alto in 1943, while Woodford was born in Chicopee, Massachusetts, in 1955. Each laureate will receive 6 million Swedish kronor, approximately $600,000, from a total prize of 12 million kronor. The academy emphasised that by communicating their fiscal and monetary plans clearly, governments and central banks can shape public expectations and 'move the economy in the right direction,' a principle now embedded in stabilisation policies across major economies.