Hall and Woodford Win Economics Nobel for Stabilization Models

Central banks and governments gained sharper tools for steering economies through inflation spikes and job losses after the Royal Swedish Academy of Sciences awarded the 2026 Sveriges Riksbank Prize in Economic Sciences to Robert E. Hall and Michael Woodford. Their decades of research supplied the microeconomic building blocks now embedded in the forecasting models used worldwide.

The academy cited the pair “for microeconomic foundations of macroeconomic stabilization.” Hall, 83, teaches at Stanford University. Woodford, 70, teaches at Columbia University. They will share the 12 million Swedish kronor prize, roughly $1.2 million.

John Hassler, chair of the prize committee, said the laureates’ framework lets policymakers respond to shocks such as energy crises or abrupt shifts in household spending. Instead of treating the economy as a single aggregate, the models trace how millions of individual households and firms form expectations and adjust behavior, the academy stated.

Woodford told reporters after the announcement that the approach proved useful after 2008. Central banks could issue clearer signals about future interest-rate paths rather than relying solely on immediate rate cuts. The same models also incorporated the idea of sticky inflation, in which prices adjust slowly to demand changes, and the output gap, a gauge of how far an economy sits from full resource use.

The economics prize, created by Sweden’s central bank in 1968, is announced last each year and is formally distinct from the five prizes established in Alfred Nobel’s 1895 will. It is presented on December 10 alongside the others. Last year’s award went to researchers studying how innovation displaces older firms while expanding overall growth.

Woodford, reached by phone in New York, called the honor “a tremendous honor, it’s a surprise.”