STOCKHOLM — U.S. economists Robert E. Hall of Stanford University and Michael Woodford of Columbia University won the 2026 Nobel memorial prize in economic sciences on Monday for work on how monetary and fiscal policy can smooth out swings in the economy, the Royal Swedish Academy of Sciences announced, Al Jazeera, CBC News and The Guardian reported.
“The laureates’ work has provided us with a stable theoretical foundation for the models that are now used by central banks and governments around the world,” said John Hassler, chair of the prize committee. “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.”
The academy credited the pair with “a paradigm shift in stabilisation policy.” When the oil shocks of the 1970s brought high inflation and high unemployment at the same time, the Keynesian models then in use stopped working. “This is the Keynesian recipe and it worked well — until it didn’t,” committee member Timo Boppart said, according to CBC News. Hall built models on forward-looking household behavior, and Woodford built on that work to create the New Keynesian model, now the main tool for policymakers, which was used after the 2008 financial crisis, The Guardian said.
Woodford spoke to the committee by phone from New York. “It’s a tremendous honour, it’s a surprise,” he said.
The prize, formally the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established by Sweden’s central bank and first awarded in 1969. It is worth a combined $1.2 million and is the last of this year’s Nobel prizes. Last year’s winners were Joel Mokyr, Philippe Aghion and Peter Howitt.
Sources: Al Jazeera, CBC News, The Guardian
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