They share the prize for having “developed a new type of macroeconomic models that have significantly improved the possibilities for conducting effective stabilization policy.”
The models allow fiscal and monetary policy measures to smooth out peaks and troughs in economic development, the Royal Swedish Academy of Sciences writes in a press release.
“The work of the laureates has given us a solid theoretical foundation for models that are now used by central banks and governments around the world. With these, we can better handle shocks to the economy, such as energy crises or sudden changes in household consumption,” says John Hassler, chairman of the Economics Prize Committee, in the press release.
Michael Woodford says it is a huge honor, but also a bit of a surprise.
“But it feels very good,” he says via link.
Robert E Hall is 83 and a professor at Stanford University in California. Michael E Woodford, born in 1955, is a professor at Columbia University. They share a prize of 12 million kronor (about $1.1 million).
The Prize in Economic Sciences in Memory of Alfred Nobel was established in 1968 by the Swedish Central Bank (Sweden’s central bank).