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Nobel Prize in Economics 2026 for two Americans, how their research influenced central bank policies

Politiko 2026-10-12 13:02:25

Nobel Prize in Economics 2026 for two Americans, how their research influenced

American economists Robert E. Hall and Michael Woodford have won the 2026 Nobel Prize in Economics for their contributions to developing models that help governments and central banks stabilize the economy and withstand economic shocks.

The Royal Swedish Academy of Sciences announced the winners this Monday, October 12, praising them for their research on the "microeconomic foundations of macroeconomic stabilization."

The work of the two economists has helped develop models that explain how the decisions of households and businesses affect the economy as a whole. These models are used to better understand economic fluctuations and to design monetary and fiscal policies that aim to mitigate the effects of crises, inflation, and sudden changes in consumption.

Hall is a professor at Stanford University, while Woodford teaches at Columbia University. Both have made important contributions to the development of modern macroeconomic theory.

One of the main aspects of Woodford's research is related to the role of expectations in monetary policy. The way households, businesses and financial markets predict inflation and future interest rate decisions influences their economic behavior. This also matters for central banks' communication with markets and the public, including the practice known as forward guidance, through which they signal the future direction of monetary policy.

Hall, on the other hand, is known for his research on the labor market, consumer behavior, and business cycles. His studies have helped analyze the connection between individual decisions and broader economic developments.

According to the Nobel Prize Committee, the work of the two economists has created a theoretical basis for models used today by central banks and governments around the world. These tools help assess measures that can be taken to mitigate shocks such as energy crises or sudden changes in consumption.

The prize for 2026 is 12 million Swedish kronor, about $1.2 million, an amount that is divided between the two winners.

The Prize in Economic Sciences in Memory of Alfred Nobel was established by the Central Bank of Sweden in 1968 and was first awarded in 1969. It was not part of the original five prizes provided for in Alfred Nobel's will.

Last year, the prize was awarded to Joel Mokyr, Philippe Aghion and Peter Howitt, for their research on the impact of innovation and technological progress on long-term economic growth.