American economists Robert E. Hall and Michael Woodford have been awarded the 2026 Nobel Memorial Prize in Economic Sciences for research that has helped governments and central banks understand economic fluctuations and respond more effectively to crises involving inflation, energy prices and employment. The Royal Swedish Academy of Sciences announced the award on Monday, October 12, recognising the economists for their contributions to the microeconomic foundations of macroeconomic stabilisation. Their research has influenced how policymakers analyse the decisions made by households and businesses and how those decisions shape the wider economy. Hall is affiliated with Stanford University in California, while Woodford is a professor at Columbia University in New York. Their work has helped develop economic models that explain how consumer behaviour, business decisions and expectations about future policies influence economic growth and stability. Hall’s research examined how households make decisions about spending and saving, particularly in response to changes in income and expectations about their future financial circumstances. Understanding these decisions is important for policymakers seeking to predict how households will respond to recessions, changes in interest rates and government economic measures. Woodford’s research focused on monetary policy and the role of expectations in shaping economic activity. His work demonstrated the importance of how businesses and households interpret central bank decisions, including announcements about future interest rates. These expectations can influence investment, consumption, prices and employment even before a policy change takes effect. Together, their contributions have helped strengthen modern macroeconomic models used by central banks and finance ministries around the world. Such models allow policymakers to assess how changes in interest rates, government spending and other economic measures may affect inflation, production and employment. The research is particularly relevant during periods of economic disruption. Energy-price shocks, financial crises, supply-chain interruptions and sudden changes in consumer demand can create difficult choices for governments. Policymakers must often balance the need to control inflation against the risk of slowing economic growth and increasing unemployment. The economists’ work has also influenced policy responses to major crises, including the global financial turmoil of 2008 and the economic disruption caused by the COVID-19 pandemic. During such periods, governments and central banks have relied on economic models to evaluate emergency measures, stabilise financial conditions and support employment. One important implication of their research is that policymakers need to consider how people and businesses respond to announcements and policy changes. A central bank’s communication about future interest rates, for example, can influence borrowing and investment decisions before rates actually change. Clear and credible communication can therefore become an important part of economic policy. The award also highlights the development of modern economic thinking, which increasingly combines individual decision-making with broader analysis of inflation, growth and employment. By examining how households and firms behave, economists can better understand why economies experience periods of expansion and recession and how policy interventions may reduce the severity of those fluctuations. The 2026 prize carries an award of 11 million Swedish kronor, to be shared between the two laureates. The formal award ceremony is scheduled for December 10 in Stockholm, marking the anniversary of Alfred Nobel’s death. The Nobel Memorial Prize in Economic Sciences was established in 1968 by Sweden’s central bank and is formally known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Although it is commonly called the Nobel Prize in Economics, it is separate from the original prizes established in Alfred Nobel’s will. The recognition of Hall and Woodford underscores the continuing importance of economic research in shaping responses to uncertainty. As countries face fluctuating energy costs, inflationary pressures and changing global trade conditions, the tools developed through their work remain relevant to policymakers seeking to maintain economic stability while protecting jobs and household purchasing power.