Americans Hall, Woodford win Nobel prize for work on stabilising economies

US economists Robert Hall and Michael Woodford were honored with the 2026 Nobel economics prize on Monday for their groundbreaking contributions to developing models that central banks and finance ministries worldwide use to stabilize economies, according to a statement from the prize committee. The prestigious award, worth 12 million Swedish crowns ($1.2 million), recognizes their work in addressing economic shocks, such as energy crises and shifts in household consumption, by incorporating micro-level decisions made by individuals and businesses.

Hall, 83, and Woodford, 70, emphasized that policymakers must consider the collective understanding of households and businesses when stabilizing an economy, rather than relying on top-down theories. This approach proved valuable in the aftermath of the global financial crisis of the late-2000s, allowing for more effective monetary policy tools.

Both laureates also contributed concepts such as "sticky" inflation and the output gap, which measure the pressure on demand within an economy and its efficiency in resource utilization. The economics prize, established by Sweden's central bank in 1969, is one of the five Nobel prizes awarded annually, the others being for physics, chemistry, literature, and peace.