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American economists Robert E. Hall and Michael Woodford were awarded the 2026 Nobel Prize in Economic Sciences — for providing an empirical formula to help governments frame stabilisation policy, incorporating household demand behaviour and firms’ supply behaviour.
Context of the News
Who Are the Winners?
| Name | Age | Position |
|---|---|---|
| Robert E. Hall | 83 | Robert and Carole McNeil Joint Hoover Senior Fellow and Professor of Economics, Stanford University |
| Michael Woodford | 71 | John Bates Clark Professor of Political Economy, Columbia University |
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What Is Stabilisation Policy?
Measures taken by the government and central bank to reduce major swings in growth, inflation and employment.
- Fiscal policy — the government changes spending and taxes. Example: raising infrastructure spending during a slowdown to create jobs
- Monetary policy — the central bank changes interest rates to influence borrowing, spending and inflation. Example: cutting rates to encourage investment
The idea originates with John Maynard Keynes, whose work gained importance during the Great Depression (1929-1939). He argued that government intervention may be needed when private spending is too weak.
