Americans Hall and Woodford win economics Nobel for work on taming boom-bust cycles
Robert E. Hall of Stanford and Michael Woodford of Columbia won the 2026 Nobel economics prize for research on how monetary and fiscal policy can smooth out economic fluctuations.
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U.S. economists Robert E. Hall of Stanford University and Michael Woodford of Columbia University won the 2026 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, the Royal Swedish Academy of Sciences announced in Stockholm on Monday. They were honored for the "microeconomic foundations of macroeconomic stabilization." The prize is worth 12 million Swedish kronor, or about $1.2 million.
Hall studied how household spending depends on expectations of future income. In a 1982 paper with Frederic Mishkin, he found that about 80% of households base their spending on such expectations, while the rest live hand to mouth. Woodford showed that businesses set prices partly based on expected future interest rates, work that underpins the now widely held view that central banks should communicate their plans clearly.
"The laureates' research has made it possible to manage major macroeconomic crises far more effectively than before," the Nobel committee said. Committee chair John Hassler said the work leaves economists better equipped to deal with shocks to the economy. Reached by phone, Woodford said: "It's a tremendous honor, it's a surprise." He returned to Columbia in 2004, having started there as an assistant professor in 1984.