Robert Hall and Michael Woodford win Nobel economics prize for models that help central banks tame recessions

From the Newshound archive · first published 12 October 2026 · last updated 13 October 2026.

Robert E. Hall of Stanford University and Michael Woodford of Columbia University are the recipients of the 2026 Nobel economics prize — a combined $1.2m award — for building models that help governments and central banks keep economies stable and steer clear of prolonged recessions or runaway inflation. The Royal Swedish Academy of Sciences in Stockholm credited their work with producing a "paradigm shift in stabilisation policy." Their New Keynesian models have since been taken up by monetary authorities and finance ministries across the globe.

Hall and Woodford's models advanced beyond John Maynard Keynes's framework, which proved inadequate during the 1970s oil shock, when countries simultaneously faced high inflation, weak growth and rising unemployment.

Woodford is widely credited with laying the foundations of "forward guidance" — the tool central banks use to signal whether interest rates are likely to rise or fall.

Hall is also credited with originating the 'fresh-water and salt-water' divide in economics, a distinction that sets free-market views against those favouring active government intervention.