Americans Hall and Woodford win Nobel Prize in economics for stabilisation models

Economists Robert Hall and Michael Woodford were awarded the Nobel Prize in Economics on Monday for their work on stabilising economic fluctuations through monetary and fiscal policy. The Royal Swedish Academy of Sciences praised their contributions to providing a stable theoretical foundation for models now used by central banks and governments worldwide.

Nobel committee chair John Hassler noted that Hall and Woodford's work enables better handling of economic shocks, such as energy crises or changes in household consumption. In the 1970s oil crises, Keynesian models used to determine economic response measures became ineffective, prompting Hall and Woodford to develop new tools based on microeconomic foundations.

Unlike traditional models that rely on statistical links between macroeconomic variables, their approach considers the collective actions of households and businesses. The Nobel Prize in Economics, established through a donation from the Swedish central bank in 1968, recognizes significant contributions to the field. Last year, the award was given to Joel Mokyr, Philippe Aghion, and Peter Howitt for their research on the role of technology in economic growth.

The laureates will receive their prizes during formal ceremonies on December 10, the anniversary of Alfred Nobel's death in 1896.