Americans Robert Hall and Michael Woodford Win 2026 Nobel Economics Prize

STOCKHOLM — Americans Robert E. Hall and Michael Woodford won the 2026 Nobel economics prize on Monday for work on the microeconomic foundations of macroeconomic stabilization, the Royal Swedish Academy of Sciences said.

Hall, of Stanford University, and Woodford, of Columbia University, were honored for research into how individual households and businesses make decisions about spending and prices, work that became a foundation of the “New Keynesian” approach to economics, according to the academy.

Their work has given central banks and governments better tools to smooth boom-and-bust cycles and limit unemployment and inflation, said John Hassler, chair of the prize committee. It has proved especially useful in dealing with shocks such as energy crises or sudden shifts in household spending.

The committee noted the work’s importance was underscored by the pandemic, which pushed millions of people out of work, and the supply shocks that followed, driving up living costs.

The prize honors work that reshaped how central banks fight recessions. After the Great Depression, economist John Maynard Keynes convinced policymakers that governments should spend more during downturns to protect jobs, and cool spending during booms to contain inflation. That recipe worked until the 1970s, when unemployment and inflation rose together and the old playbook broke down.

Hall and Woodford rebuilt the playbook from the ground up, starting with how real people behave: households deciding whether to spend or save based on what they expect to earn, and businesses setting prices that often stay fixed for months. Their key insight was that because people look ahead, a central bank can calm the economy not just by moving interest rates today but by credibly promising what it will do tomorrow — the logic behind modern practices like inflation targets and “forward guidance” from the Federal Reserve.

That framework guided central banks through the 2008 financial crisis and the pandemic, when trillions in stimulus and near-zero rates were deployed to keep unemployment from spiraling.

Hall, 83, was born in Palo Alto, California, and earned his doctorate at MIT in 1967 under Robert Solow, himself a Nobel laureate. A Stanford professor and senior fellow at the Hoover Institution, he has chaired the National Bureau of Economic Research committee that officially declares when U.S. recessions begin and end since 1978, and served as president of the American Economic Association in 2010. His landmark 1978 research showed how households base spending decisions on what they expect to earn in the future, not just what they earn today.

Woodford, 71, was born in Chicopee, Massachusetts, studied at the University of Chicago and Yale Law School, and earned his MIT doctorate in 1983. After posts at Chicago and Princeton, he has held a named chair at Columbia University since 2004. His 2003 book, “Interest and Prices,” cited more than 14,000 times, became the standard reference for how central banks set interest rates, and he has received the Deutsche Bank Prize in Financial Economics and a MacArthur fellowship.

Reached by phone in New York after the announcement, Woodford called the prize “a tremendous honor” and “a surprise.”

The prize, formally the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, is worth 12 million Swedish crowns, about $1.2 million. It is not one of the original five Nobel prizes created in Alfred Nobel’s 1895 will but was established by Sweden’s central bank in 1969.

Last year’s winners, Joel Mokyr, Philippe Aghion and Peter Howitt, were honored for work on “creative destruction” and how new technology and production methods boost growth and living standards.

The economics prize is the last of this year’s Nobels. The prizes for medicine, physics, chemistry, literature and peace were announced last week.

Most economics laureates have been American, and only three women have ever won, most recently Claudia Goldin in 2023 for work on how gender has affected pay and employment.