Robert E. Hall and Michael Woodford won the 2026 Nobel Memorial Prize in Economic Sciences on Monday for research that helps governments and central banks respond to recessions, inflation and other economic shocks.
The Royal Swedish Academy of Sciences announced the October 12 award to Hall, of Stanford University, and Woodford, of Columbia University, “for microeconomic foundations of macroeconomic stabilisation.” They will split 12 million Swedish kronor equally.
Their work helped rebuild economic models around the decisions that households and businesses make, including how much to spend, save and charge for goods. The academy said those models improved policymakers’ ability to limit economic swings.
“It’s a tremendous honor. It’s a surprise. But I’m feeling very good about it,” Woodford said by phone during the announcement, according to Columbia University’s account.
The research addresses a practical problem: People and businesses act on what they expect tomorrow, not simply what they earn or pay today.
Hall developed a way to test how expectations about future income shape household spending. His work also gave researchers a benchmark for studying households that cannot borrow or lack savings, the academy explained.
Woodford brought household spending and business pricing decisions into a model that helps policymakers examine how interest-rate changes affect the economy. He presented the model in a 2003 book.
The framework also highlights why central banks communicate their plans. Expectations about future rates and costs can influence what households buy and what businesses charge now.
Central banks and finance ministries around the world use models that build on this research, according to the academy. Researchers continue to refine them as economies change.
Sweden’s central bank established the economics memorial prize in 1968 to mark its 300th anniversary. The Royal Swedish Academy of Sciences selects recipients under the same principles that govern the Nobel Prizes, according to Columbia.
The Dallas Express previously covered this year’s Nobel Prize in Chemistry.
