2026 Nobel Prize in Economics Awarded to Robert E. Hall and Michael Woodford
The 2026 Nobel Prize in Economics has been awarded to Robert E. Hall of Stanford University and Michael Woodford of Columbia University. The Royal Swedish Academy of Sciences recognized their contribution to the “microeconomic foundations of macroeconomic stabilisation”: models that start with the choices made by households and businesses to study how economic ups and downs can be softened.
What happens, for example, when a central bank changes interest rates? The answer also depends on what people expect from the future. A household may decide whether to spend or save; a business whether to invest or change its prices. Hall helped clarify the role of consumption decisions in economic models. Woodford developed fundamental tools for analysing monetary policy and how it shapes expectations.
Their research has contributed to the development of models now used by central banks and governments to assess when and how to respond to a recession, a surge in inflation or an energy shock. The prize thus highlights a practical question: to make the economy more stable, we need to understand how public policies change the choices of the people they affect.
Bocconi economist Francesco Giavazzi commented: "The Nobel Prize awarded to Bob Hall and Mike Woodford reminds us that macroeconomics is a science. And as a science, it must be based on theoretical models subject to empirical analysis capable of validating its hypotheses and results. Bob Hall and Mike Woodford have been reminding us of this for at least 50 years, both through their fundamental theoretical contributions and through their contributions to the development of empirical analysis.”
Bocconi professor Dmitriy Sergeyev (Department of Economics) has worked alongside Michael Woodford and comments "Like many of Michael Woodford’s former and current students, I was deeply moved when his work was recognized this week with a Nobel Prize shared with Robert Hall. By the time I arrived at Columbia as a graduate student, Mike had already made his defining contributions to monetary economics. His monumental Interest and Prices, which helped give monetary policy analysis its modern microfounded form, had been in print for several years, and many already considered his work deserving of the highest recognition. What I saw as his teaching assistant, research assistant, and, luckily, his advisee was the curiosity that kept taking him toward new questions. He carried his signature approach of building microfounded models one level deeper: microfounding human behavior itself. Today he co-leads the Cognition and Decision Lab at Columbia, working at the frontier of economics and cognitive science. Perhaps material for a future prize. Congratulations, Mike!"
From Stanford, where Hall teaches, a comment by Luigi Pistaferri, a Bocconi alumnus and the Ray Lyman Wilbur Professor of Economics at the university: “It has been a pleasure and an immense honor to have Bob Hall as a colleague during my 25 years at Stanford. Bob is the kind of colleague who is already at work when you arrive, and is still at work when you leave. Not surprisingly, Bob has always been two steps ahead of everyone else. Bob began using microeconomic data to test macroeconomic theories 20 years before this became standard practice. He developed a statistical software (TSP) when he discovered that no existing statistical software could be used to test his theoretical model. He redefined the concept of how to measure the start and end of recessions. Bob is a pure academic and, at the same time, possesses an unparalleled practicality. A role model for both macroeconomists and applied economists. A solid, wise choice by the committee.”
I still remember the first scientific article I was given to read at Bocconi, at the IGIER, while preparing for my thesis: it was a paper by Michael Woodford and Lars Svensson. The topic immediately captivated me, but it was no walk in the park from a mathematical standpoint. I didn’t know at the time that that text would mark not only my first encounter with academic research, but also the beginning of a journey that would shape my career.
A few years later, in fact, I began my PhD in economics at Princeton, where Professor Woodford would become my primary advisor. In my final year, when he moved to Columbia University, I chose to follow him to New York.
Mike is one of the finest people I have ever met, both inside and outside academia. He is remarkably humble for someone of his stature, always patient and approachable with students, never too busy to discuss research. I appreciated his ability to listen to any idea, immediately identify where it wouldn’t work, and point out the right direction, always with great simplicity. I often recall him editing my writing to make it more balanced in relation to the existing literature. He has always had the ability to recognize approaches different from his own viewing them as different, not as wrong or inferior. I remember the reading group he organized at Princeton to discuss current research: he was the only professor participating alongside many of us students. It was one of the most valuable experiences of those years, one we’re trying to replicate here at UC Irvine.
Working with him taught me—as it did so many others—not only economics, but also how to conduct research: with rigor and intellectual honesty, starting from the individual decisions of consumers and businesses to arrive at aggregate laws, and developing theories capable of explaining reality, not just empty mathematical exercises. He has had a profound impact on generations of students, and continues to do so.
Some people outside our academic field wonder what the practical relevance of economic research is. In the case of Michael Woodford, the answer is simple. His work has taught us how to respond to crises and recessions, how to calibrate stabilization policies in the face of economic shocks, and how to keep inflation under control. His theories had a direct influence on monetary policy responses during the 2007-2009 financial crisis, helping to significantly mitigate its impact. The fact that the most serious mistakes of the past were not repeated is due, to a large extent, to his intellectual contribution. This contribution did not remain purely abstract or theoretical: his ideas had concrete and tangible effects on the well-being of significant segments of the population, who would otherwise have suffered the worst consequences of the recession, such as unemployment and loss of income.