By Anjali Sharma
WASHINGTON – The Royal Swedish Academy of Sciences on Monday the announced the 2026 Nobel Prize in Economics to Robert E. Hall and Michael Woodford “for microeconomic foundations of macroeconomic stabilization.”
The Royal Swedish Academy of Sciences in a statement issued said that Robert Hall and Michael Woodford’s research has generated a paradigm shift in stabilization policy.
“New Keynesian models, a result of their research, allow us to explain and quantify how stabilization policy affects business cycles and are now used by central banks and finance ministries around the world,” the Royal Swedish Academy of Sciences said.
According to it the Academy, since the laureates’ works were published, the models have been developed and refined; this process can be expected to continue as our economies keep changing.
The models can easily be adapted to the varying circumstances encountered by households and businesses.
The academy said that their research made it possible to manage major macroeconomic crises far more effectively than before.
The research has been hugely beneficial during the pandemic and the energy crises of recent years, which have not had such long-term consequences for growth and inflation as in the critical periods of the 1970s, it stated.
“We have not become mired in a catastrophic economic depression like that of the 1930s. Recessions and episodes of high inflation have not disappeared, but they are less long-lasting,” the statement added.
