Two Americans win Nobel prize for models to tackle economic downturns
Robert E. Hall and Michael Woodford were awarded the Nobel Prize in economics.
By Hanna Ziady, CNN
American professors Robert E. Hall and Michael Woodford have won the 2026 Nobel prize in economics for developing new economic models that help governments and central banks stabilize their economies to minimize the impact of external shocks.
The Royal Swedish Academy of Sciences awarded the prize in Stockholm on Monday.
“The laureates have helped us smooth out the economy’s peaks and troughs,” the academy said in a statement, adding that their models have been “extremely helpful in dealing with the economic downturns that have affected us.”
Hall, born in Palo Alto, California in 1943, is a professor at Stanford University. Woodford, born in Chicopee, Massachusetts in 1955, is a professor at Columbia University. They will each receive 6 million Swedish kronor ($598,000) in prize money.
Their work “has provided us with a stable theoretical foundation for the models that are now used by central banks and governments around the world,” noted John Hassler, the chair of the Committee for the Prize in Economic Sciences.
“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,” he added.
Rather than analyzing links between so-called “macroeconomic” variables such as inflation, production and consumption, Hall and Woodford looked to “microeconomics” to understand how the decisions of individuals and households can affect the economy.
Central to their models was the insight that households and businesses are “forward-looking” when making decisions about savings or how to price products.
Governments and central banks can influence this view of the future when communicating their plans for fiscal and monetary policy respectively and so “move the economy in the right direction,” the academy said.
The prize, officially known as the Sveriges Riksbank Prize in Economic Sciences, was not instituted by Alfred Nobel. It was established by Sweden’s central bank in 1968 and is awarded in memory of Nobel.
The number of individuals who have been awarded the prize now totals 101, only three of whom have been women. Fewer than half of the prizes awarded since 1969 have gone to one laureate only.
The economics prize concludes this year’s Nobel awards. South African judge and human rights pioneer Navi Pillay was awarded the Nobel Peace Prize on Friday. A day prior, Canadian writer Anne Carson won the Nobel Prize in literature.
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