Two Americans win the Nobel Prize in economics for their contributions to crisis management
Robert Hall and Michael Woodford were recognized for developing models that help central banks and governments combat recessions, control economic fluctuations and respond to financial crises.
Portraits of the American economists Robert E. Hall (left) and Michael Woodford
The American economists Robert Hall and Michael Woodford were awarded the 2026 Nobel Prize in economics on Monday for their research on how monetary and fiscal policies can help stabilize the economy in the face of crises and fluctuations.
The Royal Swedish Academy of Sciences announced that both researchers received the award for their contributions to the microeconomic foundations of macroeconomic stabilization, a field that studies how the decisions of households and firms influence the overall behavior of the economy.
According to the Nobel Committee, their work led to the development of models currently used by central banks and governments to design measures that mitigate the effects of recessions and other economic imbalances.
Tools for addressing economic crises
The research by Hall, affiliated with Stanford University, and Woodford, a professor at Columbia University, arose from the need to improve traditional economic models, whose limitations were exposed during the oil crises of the 1970s.
Instead of studying only the statistical relationships between inflation, output and consumption, the economists incorporated the individual behavior of households and firms to explain how they respond to decisions made by governments and central banks.
"The laureates' work has provided us with a solid theoretical foundation for the models now used by central banks and governments around the world," noted the award committee, as quoted by Reuters.
John Hassler, chairman of the committee, noted that these advances provide a better understanding of how to respond to economic shocks, such as an energy crisis or a sudden drop in consumption.
A prize of $1.2 million
The Nobel Prize in economics was established in 1968 by the Swedish Central Bank and has been awarded since 1969. Unlike the other five Nobel Prizes, it was not part of Alfred Nobel's original will.
In 2025, the prize was awarded to Joel Mokyr, Philippe Aghion and Peter Howitt for their research on the role of technological innovation in economic growth.
With this year's award, the Swedish Academy highlights the importance of economic tools that enable policymakers to anticipate and mitigate the effects of crises on businesses, workers and consumers.
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