Two American economists, Robert Hall and Michael Woodford, have been named the winners of the 2026 Nobel Prize in Economic Sciences. The Royal Swedish Academy of Sciences said the pair were recognised for showing how monetary and fiscal measures can smooth out sharp swings in an economy.
The announcement was made on Monday. The award, formally called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, is the last of this year’s prizes to be handed out.
New models designed to ease economic shocks
According to the academy, the two laureates developed new macroeconomic models that help officials carry out stabilisation policies more effectively. These models allow governments to use fiscal and monetary tools to reduce damaging fluctuations.
John Hassler, chair of the Committee for the Prize in Economic Sciences, said the work gives a stable theoretical base for models now used by central banks and governments worldwide. He added that the research helps economies cope with shocks such as energy crises or abrupt changes in household spending.
Rethinking policy after the 1970s oil crises
The academy noted that during the oil crises of the 1970s, the Keynesian models then used to decide when and how to respond to recessions stopped working. Hall and Woodford responded by developing new analytical tools to identify the most effective policy responses.
Rather than relying on statistical relationships between variables such as inflation, output and consumption, the pair grounded their models in microeconomic foundations. The academy said this approach examines how the collective choices of many households and firms shape the wider economy.
Prize history, past winners and the award value
Introduced in 1969, the economics prize is not one of the five original awards set out in Alfred Nobel’s will of 1895. It was instead set up by Sweden’s central bank.
Most previous laureates have come from the United States, and only three women have ever won. The most recent was Claudia Goldin, honoured in 2023 for research on how gender shaped earnings and employment in the US over the years.
Last year’s prize went to Joel Mokyr, Philippe Aghion and Peter Howitt for their work on ‘creative destruction’, focusing on how innovation and changing production techniques affect economic growth. Like other Nobel prizes, the economics award includes a diploma, a gold medal and a cheque for $1.2m.
The other Nobel prizes for medicine, physics, chemistry, literature and peace were announced the previous week. South African jurist Navi Pillay and Canadian writer Anne Carson were among those honoured.
