American professors Robert E. Hall and Michael Woodford have won the 2026 Nobel Prize in Economics for developing new economic models helping governments and central banks. stabilize their economy in order to minimize the impact of external shocks.
The Royal Swedish Academy of Sciences awarded the prize on Monday in Stockholm.
“The winners have helped us smooth out the ups and downs of the economy,” the academy said in a statement, adding that their models have been “extremely helpful in dealing with the economic downturns that have affected us.”
Hall, born in Palo Alto, California, in 1943, is a professor at Stanford University. Woodford, born in Chicopee, Massachusetts in 1955, is a professor at Columbia University. They will each receive 6 million Swedish crowns ($598,000) in prize money.
Their work “has provided us with a stable theoretical basis for the models that are now used by central banks and governments around the world,” noted John Hassler, chair of the Economics Prize Committee.
“Thanks to them, we are better equipped to deal with economic shocks, such as energy crises or sudden changes in household consumption,” he added.
Rather than analyzing the connections between so-called “macroeconomic” variables such as inflation, production and consumption, Hall and Woodford turned to “microeconomics” to understand how the decisions of individuals and households can affect the economy.
At the heart of their models was the idea that households and businesses are “future-looking” when making decisions about saving or pricing products.
Governments and central banks can influence this vision of the future when they communicate their fiscal and monetary policy plans respectively and thus “move the economy in the right direction”, the academy said.
This prize, officially known as the Swedish Bank Prize in Economic Sciences, was not established by Alfred Nobel. It was established by the Swedish central bank in 1968 and is awarded in memory of the Nobel Prize.
The number of winners now stands at 101, including only three women. Less than half of the prizes awarded since 1969 have gone to a single winner.
The economics prize concludes this year’s Nobel Prize ceremony. South African judge and human rights pioneer Navi Pillay received the Nobel Peace Prize on Friday. The day before, Canadian writer Anne Carson won the Nobel Prize for Literature.
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