Robert E. Hall and Michael Woodford Win 2026 Nobel Prize in Economics for Work on Boom-and-Bust Cycles
The Royal Swedish Academy of Sciences awarded the 2026 Sveriges Riksbank Prize in Economic Sciences to Stanford's Robert E. Hall and Columbia's Michael Woodford for models that help governments and central banks steer economies through shocks.
Two American economists — Robert E. Hall of Stanford University and Michael Woodford of Columbia University — have won the 2026 Nobel Prize in economics for developing economic models that help governments and central banks stabilize economies and minimize the impact of external shocks.
The Royal Swedish Academy of Sciences announced the award in Stockholm on Monday. The two laureates won for their work on how to smooth boom-and-bust cycles to limit unemployment and inflation. They will each receive 6 million Swedish kronor (about $598,000) in prize money, according to CNN.
“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.”
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 affect the economy, according to the academy.
Forward-looking households
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 that view of the future by communicating their plans for fiscal and monetary policy, and so “move the economy in the right direction,” the academy said.
“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,” said John Hassler, the chair of the Committee for the Prize in Economic Sciences, in the academy’s news release. The models, he said, have provided “a stable theoretical foundation” for the ones now used by central banks and governments around the world.
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. The economics prize — the Sveriges Riksbank Prize in Economic Sciences in memory of Alfred Nobel — is awarded each year by the Royal Swedish Academy of Sciences.
Reporting based on coverage by CNN and NPR.
