This year's Nobel Prize in economics went to Robert E. Hall, professor emeritus at Stanford University, and Michael Woodford, professor at Columbia University, for their contributions to macroeconomic theory explaining business cycles and price stability.
The Royal Swedish Academy of Sciences' Nobel Committee said on the 12th that it had selected the two professors as this year's laureates for what it described as their work establishing the microeconomic foundations of macroeconomic stabilization.
Hall is a world-renowned macroeconomist who identified how job search and wage-setting in the labor market affect unemployment and business cycles. He analyzed in particular the mechanism by which wage rigidity — the difficulty of adjusting wages — amplifies recessions and unemployment.
Woodford, a leading authority on modern monetary policy theory, systematically explained how interest rates and the expectations of economic agents affect prices and business cycles. He laid the theoretical groundwork for the view that central banks can manage market expectations and inflation by signaling the future direction of monetary policy.