Nobel Prize for economics awarded to 2 U.S. academics

Oct. 12 (UPI) -- American economists Robert E. Hall and Michael Woodford were awarded the Nobel Prize for Economics on Monday for their macroeconomic models for developing fiscal and monetary responses that can flatten out the peaks and troughs of the economic cycle.

The Royal Swedish Academy of Sciences said in a news release that California-born Stanford University professor Hall and Massachusetts-born Columbia University professor Woodford will share the $1.2 million Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel established by Sweden's central bank in 1968.

It said that the pair had been selected for demonstrating that policy aimed at stabilizing the economy could be revitalized by refashioning models through the lens of the economic impacts of households and businesses whose actions are based on what they think the future holds, rather than the traditional indicators of inflation, production and consumption.

When governments and central banks incorporated the forward-looking perspective and communicate the direction of economic policy, "they can influence this view of the future and move the economy in the right direction," said the committee, which credited the models for providing a major leg-up in helping deal with recent recessions.

"The laureates' work has provided us with a stable theoretical foundation for the models that are now used by central banks and governments around the world. With them, we are better equipped to deal with shocks in the economy, such as energy crises or sudden changes in how much households consume," said John Hassler, Chair of the Committee for the Prize in Economic Sciences.

The economics prize was the last of the 2026 awards following on from announcements of the prizes for medicine, physics, chemistry and literature.

Canadian poet and writer Anne Carson won the prize for literature on Thursday while the recipient of the Nobel Peace Prize was South African human rights lawyer Navanethem "Navi" Pillay, who was named by the Norwegian Nobel Committee on Friday.