American economists Robert E. Hall and Michael Woodford have won the 2026 Nobel Prize in Economic Sciences for developing models that have improved how governments and central banks respond to economic fluctuations.
The Royal Swedish Academy of Sciences announced the award on Monday, October 12, recognising the economists for their work on the microeconomic foundations of macroeconomic stabilisation.
Their research provides a framework for understanding how decisions made by households and businesses influence the wider economy, helping policymakers develop more effective responses to economic downturns and sudden disruptions.
According to the award committee, the models developed by Hall and Woodford have strengthened the theoretical foundations of economic policies used by central banks and governments around the world.
Their work gained relevance from the challenges posed by the oil crises of the 1970s, when existing economic models proved inadequate for explaining some economic fluctuations and guiding policy responses.
Rather than relying mainly on statistical relationships between factors such as inflation, production and consumption, the economists built their models around the behaviour and decisions of individuals, households and businesses.
The approach has helped policymakers better assess how monetary policy, including interest-rate decisions, and fiscal policy, involving government spending and taxation, can reduce the effects of economic shocks.
The award committee noted that the research has improved the ability of governments and central banks to respond to disruptions such as energy crises and sudden changes in household consumption.
Hall is affiliated with Stanford University in California, while Woodford is a professor at Columbia University in New York.
The Nobel Prize in Economic Sciences carries an award of 12 million Swedish kronor, to be shared equally between the two laureates. They are expected to receive their medals, diplomas and prize money at the formal award ceremony on December 10.
The economics prize was established by Sweden's central bank in 1968 in memory of Alfred Nobel and was first awarded in 1969. Unlike the original Nobel Prizes, it was created through a donation from the central bank rather than being included in Nobel's original will.
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