The Nobel Prize in Economics is awarded to two Americans who developed models used by central banks and governments to contain shocks and economic fluctuations and limit their effects
Quick Look
The Royal Swedish Academy of Sciences awarded the 2026 Nobel Prize in Economics to Americans Robert Hall and Michael Woodford, in recognition of their contributions to developing models linking the behavior of individuals and macroeconomic stability.
AI-generated summary
Why It Matters
The Nobel Prize in Economics, officially known as the Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was created in 1969.
The Royal Swedish Academy of Sciences announced today, Monday (October 12, 2026), that the Nobel Prize in Economics has been awarded to the Americans Robert Hall and Michael Woodford, in recognition of their work on “the micro foundations of achieving macroeconomic stability.”
The award committee praised the economic models developed by the two researchers, explaining that they enhanced the ability to take financial and monetary measures in a timely manner, thus helping to mitigate the severity of harmful fluctuations in the economy.
The research honored by the award links the behavior of individuals and families to the performance of the economy as a whole. These models help understand the impact of changing consumption, and estimate how the economy will respond to actions taken by governments and central banks.
John Hassler, Chairman of the Economic Sciences Prize Committee, said that the winners’ work provided a solid theoretical foundation for the models currently used by governments and central banks around the world.
He added that these actions enhanced the ability to deal with economic shocks, such as energy crises or sudden changes in the volume of household consumption.
The value of the prize this year is 12 million Swedish krona, or about 1.2 million dollars, and it is the last prize of the Nobel season that was announced, after the prizes for medicine, physics, chemistry, literature and peace last week.
The award is officially named “The Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.” It was awarded for the first time in 1969, after it was created by the Swedish Central Bank, and it is not one of the original five prizes stipulated in Nobel’s will in 1895.
Joel Mokyr, Philip Aghion and Peter Howitt won the award last year, in recognition of their research on economic growth and innovation, including the concept of “creative destruction”, which explains how new technologies and production methods replace old ones.
