Robert Hall and Michael Woodford receive 2026 economics prize

Robert E. Hall and Michael Woodford are the 2026 economics prize laureates, receiving the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for “microeconomic foundations of macroeconomic stabilisation.” The Royal Swedish Academy of Sciences announced the award on 12 October and said the 12 million Swedish kronor prize will be split equally between them.

Hall is a professor at Stanford University in California, while Woodford is a professor at Columbia University in New York. The Academy said their work helped rebuild macroeconomic models around decisions made by individual households and businesses, rather than relying principally on observed statistical relationships among aggregate measures such as inflation, output and consumption.

Why did Hall and Woodford win the 2026 economics prize?

The Academy said their research supplied a microeconomic basis for analysing stabilisation policy, the use of fiscal and monetary tools to limit swings in economic activity. In its account, policymakers can support an economy in recession by lowering interest rates and increasing budget deficits, while tighter policy can be used when the economy is expanding rapidly.

The award body placed the work in the context of the oil crises of the 1970s. It said the Keynesian models then used to guide policy appeared unable to reduce unemployment without generating uncontrolled inflation, during a period marked by weak growth, high unemployment and high inflation.

Hall and Woodford's approach treats firms and households as making forward-looking choices, including decisions on saving and product prices. That feature means that fiscal and monetary policy can affect the economy not only through immediate measures, but through expectations of future policy, according to the Academy. It said clear communication by governments and central banks can shape those expectations.

What are microeconomic foundations in macroeconomic policy?

Microeconomic foundations are the individual choices incorporated into an economy-wide model. In the framework described by the Academy, the aggregate path of inflation, output and consumption follows from the combined actions of households and businesses, including how they react to expected policy and economic conditions.

The Academy said well-timed policy based on such models can reduce the severity of economic upturns and downturns. John Hassler, chair of the prize committee, said the laureates' work had provided a theoretical basis for models used by central banks and governments internationally, helping policymakers address shocks including energy crises and abrupt changes in household consumption.

Hall was born in Palo Alto, California, in 1943 and received his doctorate from the Massachusetts Institute of Technology in 1967. Woodford was born in Chicopee, Massachusetts, in 1955 and received his MIT doctorate in 1983.

This story draws on original reporting from Econbrowser.