U.S. Economists Hall and Woodford Win 2026 Nobel for Stabilisation Models

Robert E. Hall of Stanford University and Michael Woodford of Columbia University have been awarded the 2026 Nobel Prize in Economic Sciences for their work on the micro‑economic foundations of macro‑economic stabilisation. The Royal Swedish Academy of Sciences announced the decision on Monday, October 12, 2026, noting that their new models allow well‑timed fiscal and monetary actions to smooth economic peaks and troughs. The prize, formally the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, carries a cash award of 12 million Swedish crowns (about $1.2 million) and will be presented on December 10, the Nobel day.

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John Hassler, chair of the Committee for the Prize in Economic Sciences, said the laureates’ work provides a stable theoretical foundation for the models used by central banks and governments worldwide. He added that with these models policymakers are better equipped to handle shocks such as energy crises or sudden changes in household consumption. Hall’s research traced how households make spending decisions based on expectations of future income and new information, explaining why consumption can be hard to predict. Woodford’s book *Interest and Prices* showed how household and firm behaviour can be built into monetary‑policy models, giving inflation targeting a solid theoretical base. Both scholars start from the choices of individual agents rather than relying on aggregate statistical links.

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Micro‑foundations means the models begin with how families and firms plan ahead, save, set prices and react to policy signals. When governments or central banks announce future actions, those expectations feed back into the economy, shaping actual outcomes. This approach helps design policies that can dampen the impact of economic shocks.