Americans Robert E. Hall of Stanford University and Michael Woodford of Columbia University have won the 2026 Nobel Memorial Prize in Economic Sciences. The Royal Swedish Academy of Sciences honoured them on 12 October 2026 “for microeconomic foundations of macroeconomic stabilisation”.
The academy said the two laureates developed new macroeconomic models that help governments and central banks respond to economic shocks. Al Jazeera reported the committee’s view that “the laureates’ work has provided us with a stable theoretical foundation for the models that are now used by central banks and governments around the world.” The prize is worth $1.2 million, with a diploma and a gold medal.
The research grew out of the problems of the 1970s. According to Al Jazeera, existing Keynesian models proved ineffective during the oil crises of that decade, and the laureates built models on microeconomic foundations. Rather than relying only on statistical correlations between aggregate variables, these models start from how individual households and businesses make decisions and then work out how those choices add up. That approach lets policymakers test how stabilisation measures would work against shocks such as an energy crisis or a change in consumption.
Robert Ernest Hall was born on 13 August 1943. He is a professor of economics at Stanford University and a senior fellow at the Hoover Institution. He holds a BA from the University of California, Berkeley, and a PhD from the Massachusetts Institute of Technology, where Robert Solow supervised his thesis. He has chaired the Business Cycle Dating Committee, the body that sets the start and end dates of US recessions, since 1978, and he was president of the American Economic Association in 2010.
Hall is a member of the National Academy of Sciences and a fellow of the American Academy of Arts and Sciences and the Econometric Society. Woodford was awarded a MacArthur Foundation fellowship that financed his research from 1981 to 1986.
One of his best-known papers, from 1978, showed that under rational expectations consumption should be a martingale, meaning that changes in consumption should be unpredictable and should happen only when there is surprising news about income. Later evidence has shown that consumption is somewhat more predictable than he claimed, but his paper made the martingale case the baseline for most empirical research on consumption.
Michael Dean Woodford, born in 1955, teaches at Columbia University. He holds a BA from the University of Chicago (1977), a law degree from Yale (1980) and a PhD in economics from MIT (1983). Working with Julio Rotemberg, he developed a model of the microfoundations of New Keynesian economics, and he has used that framework to study monetary policy, inflation targeting and the fiscal theory of the price level. His textbook Interest and Prices won the Deutsche Bank Prize in 2007, and he calls his own framework “neo-Wicksellian”.
The prize was first awarded in 1969, and only three women have won it. For readers who follow interest-rate decisions, the award recognises ideas that sit behind how central banks reason about inflation and recessions. Delima News notes that this article draws on the academy’s announcement as reported by Al Jazeera and on the laureates’ Wikipedia biographies, and it makes no claim about how the models perform in current conditions.
Image: The Stockholm Concert Hall, where Nobel Prizes are presented (file photo, not from the events described). Photo: Karen Zhou / Wikimedia Commons (CC BY-SA 4.0)
