Robert Hall and Michael Woodford win the 2026 Nobel economics prize

The Royal Swedish Academy of Sciences announced in Stockholm on Monday, October 12, that the 2026 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel goes to two American economists: Robert Hall of Stanford University in California and Michael Woodford of Columbia University in New York. The prize is worth 12 million Swedish kronor, about $1.2 million. Scroll.in reports that the two share it equally and puts the sum at about Rs 11.4 crore.

The academy cited the pair for work on the microeconomic foundations of macroeconomic stabilization. Mathrubhumi notes that the announcement closed this year's Nobel season, following the medicine, physics, chemistry, literature and peace awards earlier in the week.

What the work is

Stabilization policy means the fiscal and monetary measures governments and central banks use to smooth the business cycle, support employment and keep inflation in check, according to Scroll.in. It quotes the academy as saying the laureates' models significantly improved the ability to carry out such policy.

The academy said the models are not built on statistical relationships between variables such as inflation, output and consumption. They are built on microeconomic foundations, an approach that captures how the combined actions of individual households and businesses shape the economy, Scroll.in reports.

The Kathmandu Post, carrying a Reuters report, gives the same account in plainer terms: an economy can be kept steady only by taking into account the many small decisions made by households and firms, not by top-down theory. Reuters says the pair's work also advanced the ideas of forward guidance, meaning explicit statements about the likely path of interest rates, and of sticky inflation, where prices adjust slowly to changes in demand.

What the committee and laureates said

John Hassler, chair of the Committee for the Prize in Economic Sciences, said the work gave a stable theoretical foundation to models now used by central banks and governments worldwide (Mathrubhumi). Reuters quotes him as saying: "With them, we are better equipped to deal with shocks in the economy." He named energy crises and sudden changes in household consumption as examples.

Woodford, speaking by phone from New York, called the prize a tremendous honor and a surprise, Mathrubhumi reports. Reuters says he told the news conference that the framework helped strengthen monetary policy tools during the global financial crisis of the late 2000s, and he contrasted that with the 1970s oil shocks, when central banks struggled with high inflation. Neither report includes a comment from Hall.

The prize and its record

Both reports note that the economics prize is not one of the five prizes created in Alfred Nobel's will. Mathrubhumi says Sweden's central bank established it in 1968; Reuters says it was first awarded in 1969. It is administered by the Nobel Foundation and presented with the others on December 10, Mathrubhumi reports.

Reuters adds that most past laureates have been from the United States and that only three women have won, the most recent being Claudia Goldin in 2023. It lists Hall's age as 83 and Woodford's as 70. Last year's prize went to Joel Mokyr, Philippe Aghion and Peter Howitt for work on creative destruction.