Americans Hall and Woodford win economics Nobel for stabilisation models

American economists Robert Hall and Michael Woodford were awarded the Nobel economics prize on Monday for their work on stabilizing economic fluctuations through monetary and fiscal policy. The Royal Swedish Academy of Sciences highlighted that their work has provided a stable foundation for the models now used by central banks and governments worldwide.

John Hassler, chair of the prize committee, explained that their research helps nations better respond to economic shocks such as energy crises or sudden changes in household consumption. Hall and Woodford's new tools emerged during the 1970s oil crises when Keynesian models, which were widely used to address recessions or economic fluctuations, proved ineffective.

Instead of relying on statistical links between macroeconomic variables like inflation, production, and consumption, Hall and Woodford focused on a microeconomic foundation, understanding how individual households and businesses collectively influence the economy. The Nobel Prize in Economic Sciences, created in 1968 through a donation from the Swedish central bank, consists of a diploma, a gold medal, and a $1.2 million check.

The laureates will receive their prizes on December 10, the anniversary of Alfred Nobel's death in 1896, when he established the prize in his will.