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.”