Nobel economics prize awarded to Robert Hall and Michael ⁠Woodford

The Swedish academy says the academics’ models are ‘now used by Central Banks and ​Governments around the world’.The ⁠2026 Nobel Prize in Economic Sciences has been awarded to US academics Robert Hall and Michael ⁠Woodford for their work on how monetary and Fiscal Policy can help stabilise fluctuations in the economy, according to the Royal Swedish Academy of Sciences.The winners of the prestigious award, formally known ⁠as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel and the final prize to be given out this year, were announced on Monday.Recommended Stories list of 4 itemslist 1 of 4Canadian Anne Carson wins 2026 Nobel Prize in Literaturelist 2 of 4Who is Navi Pillay, winner of the 2026 Nobel Peace Prize?list 3 of 4US sanctions International Criminal Court in major escalationlist 4 of 4Why is the US sanctioning the International Criminal Court?end of listThe two laureates developed new macroeconomic models that improve people’s ability to implement effective stabilisation policies, enabling fiscal and Monetary Policy measures that can reduce damaging swings in the economy.“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,” John Hassler, chair of the Committee for the Prize in Economic Sciences, said in a statement.“With them, we are better equipped to deal with shocks in the economy, such as energy crises or sudden changes in how much households consume.”During the oil crises in the 1970s, the existing Keynesian Models used to determine when and how measures should be implemented to tackle recessions or other Economic Fluctuations stopped working. Hall and Woodford then developed new tools to understand what policy responses could be the most effective.“Rather than basing the models on statistical links between macroeconomic variables, such as inflation, production and consumption, they chose to build them on a microeconomic foundation,” the academy said. “This encompasses an understanding of how the total mass of individual households and businesses affect the economy through their actions.”