Nobel in economics goes to Hall and Woodford for stabilisation models
Stanford's Robert E. Hall and Columbia's Michael Woodford share the 2026 economics prize for building microeconomic foundations into the models central banks and governments use to smooth booms and busts.
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What happened
The Royal Swedish Academy of Sciences awarded the 2026 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Robert E. Hall of Stanford University and Michael Woodford of Columbia University "for microeconomic foundations of macroeconomic stabilisation." They share equally a prize of 12 million Swedish kronor.
Why it matters
John Hassler, chair of the prize committee, said the work gives "a stable theoretical foundation for the models that are now used by central banks and governments around the world," including for shocks such as energy crises or sudden shifts in household spending. CNBC noted the pair are U.S.-born professors at Stanford and Columbia.
More context
What they did: The Academy said Hall and Woodford rebuilt models used for fiscal and monetary policy on how individual households and businesses make forward-looking choices, rather than on statistical links among broad variables such as inflation, production and consumption. Central banks and governments can then use communications about future policy to shape those expectations and dampen swings.
Primary excerpt: "On the basis of these models, well-timed fiscal and monetary policy measures can reduce the economy's peaks and troughs," the Academy wrote. "Since the new models' introduction, they have been extremely helpful in dealing with the economic downturns that have affected us."
What would change the story: How Fed Chair Warsh and other officials cite New Keynesian models in the run-up to the Oct. 27–28 FOMC meeting, and whether this week's September CPI print (due Wednesday) shifts hike odds that markets have largely parked in December.
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Editorial sourcing notes
Facts and quotes are from the Royal Swedish Academy of Sciences press release on NobelPrize.org, Oct. 12, 2026, with CNBC's same-day report for U.S. context. No licensed portraits of the laureates were available.
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