The 2026 Nobel Prize in Economic Sciences goes to the American economists Robert E. Hall and Michael Woodford, "for the microeconomic foundations of macroeconomic stabilization". Thanks to them, said John Hassler, chairman of the prize committee, "we are better equipped to deal with shocks in the economy, such as energy crises or sudden changes in household consumption." The prize is awarded by the Royal Swedish Academic of Sciences in Stockholm, Sweden. It is the last recognition of the year, after those for Medicine, Physics, Chemistry, Literature and Peace. Like the other awardees, Hall and Woodoford also receive a gold medal and a check for an equal 12 million Swedish kronor (approximately 1.06 million euros).
Why Hall and Woodford were awarded the Nobel
Economic development, explains the Nobel Prize winner, “is characterized by alternating phases of contraction and expansion”. Stimulating or slowing the economy at the right time can therefore “help ensure stability and avoid prolonged recessions or runaway inflation”. This is where the research of Robert E. Hall and Michael Woodford enters, which "has brought about a paradigm shift in economic stabilization policies". Hall was most notably honored for a 1978 article on how consumers prefer consumption to remain stable, while Woodford went on to develop the so-called modern Keynesian model, which has since proven highly influential among global policymakers even today. Their studies make it possible to explain and quantify the effects of stabilization policies on the cyclical fluctuations of the economy and are today used by central banks and finance ministries around the world.
The “stabilization”
The two Nobel Prize winners demonstrated in particular how it is possible to reconstruct existing economic models to relaunch stabilization policies. Rather than basing them on statistical correlations between macroeconomic variables, such as inflation, production and consumption, Robert E. Hall and Michael Woodford chose to base them on microeconomic bases, giving life to a new approach that allows us to understand how the decisions of individual families and businesses influence the economy as a whole.
Who is Robert E. Hall
Robert Ernest Hall was born in Palo Alto, California, in 1945. Honorary Fellow Emeritus of Economics at Stanford University and Senior Research Fellow Emeritus at the Hoover Institution, he graduated from the University of California, Berkeley, and received his doctorate in Economics from the Massachusetts Institute of Technology (MIT). His studies have focused on issues such as work and employment, inflation and competition. For a long time he was director of the research program of the National Bureau of Economic Research, dedicated to economic fluctuations and growth. In 2010 he was president of the American Economic Association.
Who is Michael Woodford
Michael Woodford was born in 1955 in Chicopee, Massachusetts. He is currently a professor of Political Economy in New York, where he returned in 2004, after years teaching at the University of Chicago and Princeton. He first graduated from the University of Chicago with a bachelor's degree, then a law degree from Yale and finally a doctorate in economics from MIT. Woodford is one of the most important contemporary scholars of macroeconomic theory and monetary policy. His book Interest and Prices: Foundations of a Theory of Monetary Policy (2003) is often used as a basis for studying the theoretical foundations of monetary policy. He received the Deutsche Bank Prize in Financial Economics in 2007, the Banque de France–TSE Prize in Monetary Economics in 2018 and the Erwin Plein Nemmers Prize in Economics in 2024.
