2026 Nobel Prize in Economics awarded to Robert E. Hall and Michael Woodford for developing macroeconomic models

October 12, 2026

New Delhi: The Royal Swedish Academy of Sciences on Monday announced the 2026 Nobel Prize in Economics to American economists Robert E. Hall and Michael Woodford. The two economists were honored for developing macroeconomic models that have improved policymakers’ ability to stabilize the economy during periods of boom and recession.

According to the Academy, the research of both economists has provided a strong theoretical foundation for fiscal and monetary policies. This has helped governments and central banks control economic fluctuations through timely policy measures.

According to the Nobel Committee, Robert E. Hall of Stanford University and Michael Woodford of Columbia University developed macroeconomic models based on microeconomic principles. Their research focused on how households and businesses make decisions and how their individual decisions collectively affect the overall economy.

Research on the 1970s Economic Crisis

The two economists’ research came at a time when traditional Keynesian economic models were facing criticism following the oil crisis of the 1970s. At that time, many developed economies faced problems such as rising inflation, weak economic growth, and unemployment.

The Nobel Committee stated that Hall and Woodford demonstrated that macroeconomic models could be redesigned to incorporate future decisions by consumers and businesses. This helped strengthen confidence in policies that stabilize the economy.

A key aspect of their research is that households and companies take future economic conditions into account when deciding on spending, saving, investment, and commodity prices. Therefore, signals from policies by governments and central banks can influence public expectations and help guide economic activity.

Models Proven Useful for Central Banks and Governments

According to the Academy, the models developed by Hall and Woodford are widely used by central banks and governments around the world. They have also been found useful in dealing with economic recessions and external shocks.

John Hassler, Chairman of the Nobel Prize Committee in Economics, said, “The laureates’ work has provided a stable theoretical foundation for the models now used by central banks and governments around the world.”

He added that these models have helped predict the energy crisis and domestic inflation.