The Royal Swedish Academy of Sciences announced on Monday that the 2026 Sveriges Riksbank Prize in Economic Sciences was awarded to Robert Hall of Stanford University and Michael Woodford of Columbia University for their decades‑long research on the microeconomic foundations of macroeconomic stabilisation.

The academy said their models enable governments and central banks to smooth economic peaks and troughs by improving the timing of fiscal and monetary measures.

Hall’s 1978 paper on household consumption expectations established a micro‑based view of demand, while Woodford’s research on firms’ price‑setting behaviour integrated the supply side, together forming the basis of New Keynesian models used worldwide.

Timo Boppart, a Stockholm University professor and prize‑committee member, described Hall’s focus on demand and Woodford’s on supply as the pieces that completed a comprehensive stabilisation framework.

The prize carries a total award of 12 million Swedish kronor, roughly 1.2 million US dollars, underscoring the academy’s view of the laureates’ paradigm‑shifting impact on policy modelling.

John Hassler, chair of the Committee for the Prize in Economic Sciences, said the laureates’ work provides a stable theoretical foundation for the models now employed by central banks and governments worldwide, enhancing preparedness for shocks such as energy crises or sudden changes in household consumption.

The award arrives amid heightened geopolitical uncertainty and a fragile global economy, where frequent shocks challenge policymakers and make the laureates’ contributions especially relevant.

European Central Bank President Christine Lagarde congratulated the economists, noting that their research has greatly improved understanding of economic decisions and strengthened the foundations for effective policy.

Woodford said his work highlighted the importance of forward guidance, a policy tool that signals future interest‑rate paths and has become central to stabilisation strategies.