2026 economics prize awarded to Robert Hall and Michael Woodford
The award recognises their microeconomic foundations of macroeconomic stabilisation. The 12 million Swedish kronor prize is shared equally.
Robert E. Hall and Michael Woodford have been awarded the 2026 prize in economic sciences for their contribution to the “microeconomic foundations of macroeconomic stabilisation”, the Royal Swedish Academy of Sciences announced on 12 October.
The formal name is the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. It is widely known as the Nobel economics prize. The 12 million Swedish kronor award is shared equally between the two economists.
Why they were awarded the prize
The Academy credits Hall and Woodford with a decisive role in developing New Keynesian models built from the bottom up. They start with the decisions of households and businesses and examine how those decisions shape consumption, production, prices and inflation.
Central banks and finance ministries now use such models to assess when and how strongly interest rates, taxes, transfers and public spending may soften a recession or cool an inflationary boom.
Robert Hall's contribution
Hall showed that household consumption depends heavily on expectations about future income. Because genuinely new information cannot be predicted, changes in consumption cannot be forecast in the simple way assumed by older models.
His approach created a benchmark for estimating how many households plan with the future in mind and how many effectively live from current income without access to savings or borrowing.
Michael Woodford's contribution
Woodford presented a complete New Keynesian macroeconomic model with microeconomic foundations. In this framework, the policy rate affects current consumption decisions, while businesses' inability to change prices continuously helps explain why shifts in demand affect production and employment.
His work also highlighted the importance of expectations, credibility and clear central-bank communication: pricing and consumption decisions are influenced by what businesses and households expect future interest rates to be.
Practical significance
The award is not a new government decision or an immediate measure for households. It recognises the theoretical foundation of tools used to respond to economic shocks such as energy crises, sudden consumption changes, high unemployment or runaway inflation.
Robert E. Hall is a professor at Stanford University and Michael Woodford is a professor at Columbia University. Both earned doctorates from MIT.
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