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

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

American economist Robert E. Hall of Stanford University and Columbia University economist Michael Woodford have become the laureates of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2026. The Royal Swedish Academy of Sciences awarded them the prize "for the microeconomic foundations of macroeconomic stabilization."

The scientists' research contributed to the development of macroeconomic models that allow evaluating how the decisions of individual households and companies affect the broader economy. These models help analyze how timely fiscal and monetary policy measures can mitigate economic downturns and limit economic overheating.

The economy develops cyclically, experiencing phases of expansion and contraction. During a recession, governments can stimulate economic activity by lowering interest rates and increasing budget deficits. Conversely, when the economy overheats, measures aimed at limiting activity are applied.

The oil crises of the 1970s, high inflation, and unemployment called into question several effective aspects of traditional Keynesian models. Under these conditions, Hall and Woodford contributed to the development of an approach based on microeconomic principles that takes into account the behavior of market participants.

An important feature of such models is that households and companies make decisions taking into account expectations about the future. People evaluate prospects when choosing between consumption and saving, while companies take future conditions into account when setting prices. Therefore, announcements by governments and central banks regarding planned economic policy measures can influence the expectations and decisions of market participants.

John Hassler, Chair of the Committee for the Prize in Economic Sciences, stated that the laureates' research created a theoretical foundation for models used by central banks and governments around the world. These developments help assess the potential consequences of economic shocks, such as energy crises and sudden shifts in consumer spending.

Robert E. Hall was born in 1943 in Palo Alto, California. He received his PhD from the Massachusetts Institute of Technology in 1967. Hall works as a professor at Stanford University.

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

The prize amount is 12 million Swedish kronor. According to the announcement, this amount will be shared equally between the two laureates.

Founded in 1739, the Royal Swedish Academy of Sciences is an independent organization that serves to promote the advancement of science and strengthen its role in society. The Academy pays special attention to natural sciences and mathematics.