Hall and Woodford share 2026 Nobel economics prize for policy models

Robert E. Hall of Stanford University and Michael Woodford of Columbia University have won the 2026 Nobel economics prize. The Royal Swedish Academy of Sciences announced the award on October 12, recognizing work that rebuilt models of economy-wide fluctuations around decisions made by households and businesses. The two economists will split 12 million Swedish kronor equally.

The academy says their contribution was to replace reliance on statistical relationships among broad measures such as inflation and consumption with models grounded in individual behavior. In those models, households and companies consider the future when deciding how much to save or what prices to charge. That makes expectations part of how policy affects the economy.

The academy says governments and central banks can influence these expectations by communicating their policy plans. It argues that well-timed fiscal and monetary measures can soften economic swings. The announcement describes the laureates' work as a theoretical foundation for models used by policymakers worldwide to address shocks such as energy crises or abrupt changes in household spending.

MIT News highlights Hall's work from the late 1970s on expectations and household consumption, alongside the macroeconomic model Woodford introduced in his 2003 book, Interest and Prices. The university's account connects both contributions to the development of New Keynesian models used for economic stabilization.