Robert E Hall and Michael Woodford won in the Economic Sciences category for 2026
The 2026 Nobel Prize in Economics has been awarded to Robert E Hall and Michael Woodford for their contributions to understanding macroeconomic stabilisation, the Royal Swedish Academy of Sciences announced on Monday.
The two economists were recognised “for microeconomic foundations of macroeconomic stabilisation.”"The laureates have helped us smooth out the economy’s peaks and troughs," said the Academy in its press release.
Robert E Hall earned a bachelor’s degree in economics from the University of California, Berkeley, and a PhD in economics from the Massachusetts Institute of Technology (MIT), while Michael Woodford holds a bachelor’s degree from the University of Chicago, a law degree from Yale Law School and a PhD in economics from MIT.They both were recognised for developing economic models that have helped governments and central banks better manage economic fluctuations. Their work showed how timely changes in interest rates, government spending and taxation could help reduce the impact of recessions and prevent economies from overheating.Their research helped address the limitations of earlier economic models, particularly those exposed during the oil crises of the 1970s, when high inflation, unemployment and weak growth occurred simultaneously.
Instead of relying mainly on broad economic indicators such as inflation, production and consumption, the two economists developed models based on how individual households and businesses make financial decisions.A key finding of their work was that people and businesses make decisions based not only on current economic conditions but also on their expectations of the future. This showed how governments and central banks could influence economic activity by clearly communicating their policy plans.
Their models have since become important tools for designing monetary and fiscal policies and responding to economic shocks.“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. 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,” says John Hassler, chair of the Committee for the Prize in Economic Sciences.Unlike the other Nobel Prizes, the Economics Prize was not established by Alfred Nobel in his will. It was instituted in 1968 by Sveriges Riksbank, Sweden’s central bank, to mark its 300th anniversary, and was first awarded in 1969 to Ragnar Frisch and Jan Tinbergen. Officially known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, it is awarded by the Royal Swedish Academy of Sciences under the same principles as the original Nobel Prizes.
The prize money is funded by Sweden’s central bank and is equal to that awarded in the other Nobel categories. Meanwhile, two Indian-born economists have won the prize in this category. Amartya Sen won in 1998 for his contributions to welfare economics, and Abhijit Banerjee in 2019, who shared the award with Esther Duflo and Michael Kremer for their experimental approach to alleviating global poverty.