Two American economists win Nobel memorial prize in economics
Robert E. Hall and Michael Woodford, both American-born, were awarded the Nobel memorial prize in economics for their work on macro‑stabilisation models, a prize worth 12 million Swedish kronor.
Two American economists, Robert E. Hall and Michael Woodford, received the Nobel memorial prize in economics for their models that help governments and central banks manage shocks. The award highlights a shift in economic policy tools that affect everyday financial stability.
American‑born economists Robert E. Hall, 83, of Stanford University, and Michael Woodford, born in 1955 and affiliated with Columbia University, were announced as the winners of the Nobel memorial prize in economics on Monday.
What we know
The Royal Swedish Academy of Sciences said the laureates are being honored "for microeconomic foundations of macroeconomic stabilisation." The academy added that their work has helped smooth out the economy's peaks and troughs. John Hassler, chair of the Committee for the Prize in Economic Sciences, said the laureates' research provides a stable theoretical foundation for the models now used by central banks and governments worldwide, improving the ability to deal with shocks such as energy crises or sudden changes in household consumption.
Woodford, speaking by phone from New York, called the award "a tremendous honor, it's a surprise." The prize money this year is 12 million Swedish kronor, roughly $1.2 million, whether awarded to an individual, a small group of laureates, or an organization.
The award follows a lineage of U.S. dominance in the economics prize, a point noted by Reuters, which observes that most previous winners have been American. Only three women have ever won, most recently Claudia Goldin in 2023 for research on gender and pay in the United States.
While the prize is formally known as the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, Nobel purists stress that it is technically not a Nobel Prize. Nevertheless, it is presented alongside the traditional Nobel awards on Dec. 10, the anniversary of Nobel’s death.
Background on the laureates' work
For decades, economic policy relied on Keynesian prescriptions: lower taxes and higher government spending to revive demand during downturns. However, the stagflation of the 1970s—simultaneous high inflation and unemployment—exposed the limits of that approach. Hall and Woodford responded by developing models that incorporate how consumers and businesses actually decide to invest and spend, offering a more nuanced framework for stabilisation policy.
Timo Boppart of the Nobel economics prize committee noted that the classic Keynesian recipe "worked well – until it didn't," highlighting the need for updated tools. Hall and Woodford’s contributions, according to Hassler, "helped build this new foundation for stabilization policy," positioning policymakers to better navigate modern economic shocks.
Sources
Photo: RDNE Stock project / Pexels (illustrative)