American economists Robert E. Hall and Michael Woodford have won the 2026 Nobel Prize in Economic Sciences for their research on how governments can keep economies stable during periods of uncertainty.
The Royal Swedish Academy of Sciences announced the award on Monday, October 12. It recognised their work on the “microeconomic foundations of macroeconomic stabilisation.” Their research has helped improve economic models used to guide government policies and manage economic shocks.
Hall is a professor emeritus at Stanford University in California. Woodford is a professor at Columbia University in New York. They will share the prize money of 12 million Swedish kronor, worth approximately $1.2 million.
Research Helps Governments Manage Economic Shocks
The two economists examined how the decisions of households and businesses affect the wider economy. Their work moved beyond models based mainly on broad indicators such as inflation, production and consumption.
Instead, their research explored how individual choices shape economic trends. For example, household spending decisions and business investment can influence growth, inflation and the effects of government policies.
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According to the Royal Swedish Academy of Sciences, their models have strengthened the theoretical basis for policies that help reduce economic fluctuations. Governments and central banks can use these models to assess how to respond to recessions, energy crises and sudden economic changes.
Why Economic Stabilisation Matters
Economies regularly experience periods of growth and decline. During a crisis, governments and central banks often adjust fiscal or monetary policies to limit the damage.
However, the effects of these measures depend partly on how households and businesses respond. The research by Hall and Woodford helped economists better understand these connections and improve the models used for policy decisions.
Economics Prize Has a Separate Official Name
Unlike the Nobel Prizes in Physics, Chemistry, Medicine, Literature and Peace, the economics award was not part of Alfred Nobel’s original will.
Its official name is the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Sweden’s central bank established the prize in 1968, and the first award followed in 1969.
The 2026 economics award was the final Nobel Prize announced this year. The announcement completed the annual series of Nobel Prize announcements, which began on October 5.
