Nobel Prize for Economics awarded to Hall and Woodford
Newsflash: The Nobel Prize for economics has been awarded to Robert E Hall and Michael Woodford, for their work on the “microeconomic foundations of macroeconomic stabilisation”.
[Reminder: As we flagged earlier, Woodford was among the predicted winners – he’s one of the architects of modern forward guidance, the idea that central banks can control the economy through influencing public expectations about inflation, rather than just through interest rates.]
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel is worth 12 million Swedish kronor (£900,000), plus the glory of course, and the knowledge that every pronouncement you make now comes with the authority of a Nobel Prize winner.
Closing post
Time to wrap up…
Two US economists have won the 2026 Nobel economics prize for their work developing models that help central bankers and finance ministers to stabilise their countries, avoiding long recessions and runaway inflation.
Robert Hall of Stanford University, California, and Michael Woodford of Columbia University, New York, were recognised for developing the “microeconomic foundations of macroeconomic stabilisation”, giving policymakers better tools to smooth out the peaks and troughs of their economies.
The Royal Swedish Academy of Sciences said it was recognising the pair for generating “a paradigm shift in stabilisation policy”, awarding them the prize worth a combined $1.2m (£900,000).
“New Keynesian models, a result of their research, allow us to explain and quantify how stabilisation policy affects business cycles and are now used by central banks and finance ministries around the world,” the academy said.
Here’s the full story:
In other news….
The EU is to limit the number of hybrid electric vehicles imported from China to 350,000 cars a year.
Artificial intelligence is less regulated than milk and washing machines, the president of Microsoft has said, as the tech industry warns over the safety of AI.
Millions of British van drivers face a combined £2.5bn cost to cover the rising price of diesel this year, according to figures, fuelling calls for the government to scrap its planned fuel duty rise.
John Healey has been warned by Britain’s leading tax and spending experts that his budget risks being a “work of fiction” unless he sets out plans to cover £35bn in spending pressures.
The euro is having a bad day, dropping to a 16-month low against the pound.
Expectations that the Bank of England will raise interest rates next month appear to have lifted the pound to €1.1836, the highest since June 2025.
Enrique Díaz-Alvarez, chief economist at global financial services firm Ebury, says:
Back in the financial markets, the oil price is pushing higher after Saudi Arabia was hit by new attacks.
Brent crude is now up 2% at $106.80 a barrel, after Saudi Arabia said it was facing a new barrage of incoming fire on Monday.
Riyadh airport remains shut after a deadly missile strike on a departure terminal on Saturday, that was claimed by Yemen’s Iran-allied Houthis.
HMV to quit historic Oxford Street store, again….
Away from the Nobel economics prize announcement….HMV is preparing to exit its London flagship on Oxford Street in March – just over three years after reopening there with great fanfair – as the landlord proposed doubling the rent.
The entertainment retailer said it was now seeking alternative sites on the capital’s main high street, or another central location, as it had been trading strongly, my colleague Sarah Butler reports.
The latest closure comes after HMV returned to the site in November 2023 after closing in 2019 leaving the store empty for an extended period before a brief stint housing one of many American candy stores that popped up on Oxford Street during the pandemic.
HMV, which currently has 114 stores under its own brand across the UK and a further six Fopp sites, said a proposed increase in rent which is already understood to be well over £1m a year – coupled with a requirement to fund substantial renovation works on the Oxford Street building – would make the store “commercially unsustainable”, leaving it with no choice but to seek an alternative site.
The store was HMV’s very first, and was opened in 1921 by Sir Edward Elgar, the British composer. Since then it has played host to a number of British bands, including a rooftop gig by Blur in 1995 and the Spice Girls’ Christmas lights switch-on the following year.
It is understood the Hong Kong-based landlord has signed a lease with an alternative tenant.
Phil Halliday, managing director of HMV, said:
He said sales were up by a quarter year-on-year at the Oxford Street store and 15% at established UK stores in the first nine months of 2026 as sales of both vinyl records and CDs continued to sell well and more shoppers came into stores.
“We have put together an offer that works across a number of generations,” Halliday added.
The retailer is expecting UK revenues to exceed £240m this year across the stores estate and website, up from £212m in 2025. The business now generates £50m of sales online and is upgrading its website backed by a new warehouse set to open next year.
“We’ve worked hard to make 363 Oxford Street a destination for pop-culture fans, bringing live performances, artist signings and a huge range of music and entertainment back to the heart of London. However, regardless of how much a location means to us, it has to make commercial sense.” Halliday said.
He said HMV intended to redeploy affected staff through other London stores and Head Office roles.
After learning of his success, Michael Woodford was asked during today’s press conference if any economic event or shock had ensured that his new framework had really stood up to the test.
Bloomberg has the details:
Here’s how John Hassler, chair of the prize committee, announced Hall and Woodford’s success this morning:
Over at FT Alphaville, Toby Nangle has described Michael Woodford is “probably the most famous New Keynesian economist”.
Nangle (formally a senior asset manager at Columbia Threadneedle) writes:
Just three women have ever won Nobel economics prize
Robert Hall and Michael Woodford’s success today means that 101 individuals have been awarded the economics prize, but only three are women.
The first, Elinor Ostrom, was in 2009, when she was recognised for her work exploring how people come together to preserve their collective resources.
Esther Duflo followed a decade later, for work on an experimental approach to alleviating global poverty.
The third, Harvard professor Claudia Goldin, won in 2023 in recognition of her groundbreaking work examining wage inequality between men and women.
Following today’s announcement, the Nobel prize for economics has now been awarded on 58 occasions.
That dates back to 1969, when Ragnar Frisch and Jan Tinbergen won it “for having developed and applied dynamic models for the analysis of economic processes”.
The oldest winner was Leonid Hurwicz, who was 90 in 2007 when he won alongside Eric Maskin and Roger Myerson “for having laid the foundations of mechanism design theory”.
The youngest remains Esther Duflo, who was just 46 in 2019 when she shared the prize with Abhijit Banerjee and Michael Kremer. “for their experimental approach to alleviating global poverty” (as we blogged here).
Praise for Woodford and Hall is starting to pour in
Analytics company Clarivate, which had awarded both Robert Hall and Michael Woodford one of its Citations Laureate – given to those who are considered likely to win the Nobel Prize due to their research expertise – says today’s award is certainly merited.
David Pendlebury, head of research analysis, institute for scientific information at Clarivate, explains:
Economics professor Costas Milas of the University of Liverpool says Woodford’s work has lessons for UK policymakers today, as they try to unwind the stimulus measures implemented since the financial crisis.
He tells us:
How Hall created the fresh-water and salt-water economic divide
Robert Hall is also famous for coining the fresh water vs. salt water split in American macroeconomics.
This divide is both ideological and geographical.
A fresh water economist, Hall wrote 50 years ago, believes that economic fluctuations are largely attributable to supply shifts, and that the government is essentially incapable of affecting the level of economic activity. This leads to a belief in free markets, neoclassical price theory, rational expectations, and monetarism.
Freshwater economists tend to be based at inland universities located near the North American Great Lakes, such as the University of Chicago.
The salt water view holds shifts in demand responsible for fluctuations and thinks government policies (at least monetary policy) is capable of affecting demand, Hall argued.
Salt water economists thrive at the US coastal universities, such as Harvard, MIT, UC Berkeley, Yale, Princeton, UCLA, and Columbia.
On his page at Stanford, Hall writes:
[The cheque is in the post, sir].
Who are our latest Nobel Economics laureates?….
Michael Woodford was born in 1955 in Chicopee, Massachusetts.
He’s based at Columbia University, New York, where he’s the John Bates Clark Professor of Political Economy.
According to Columbia:
Robert Hall, the older of the pair, was born in 1943 in Palo Alto, California (the birth place of Silicon Valley).
Hall is based at Stanford University, California, where he’s the Robert and Carole McNeil Joint Senior Fellow, Hoover Institution, and professor in the department of economics.
On Stanford’s website, Hall describes himself as “an applied economist with interests in employment, inflation, technology, competition, and economic policy in the aggregate economy and in particular markets.”
That work has included developing a framework for equitable and efficient consumption taxation, research into economic fluctuations and growth, and advising a number of government agencies on national economic policy.
Woodford: I'm elated
Michael Woodford is now speaking to the Nobel prize commitee, by telephone.
He says he’s “elated”, as winning the prize is “a tremendous honour”.
“It’s a surprise, but I’m feeling very good about it,” he adds.
Woodford now explaining how the 2008 financial crisis stretched the limits of traditional monetary policy, as interest rates fell to record lows, while unemployment was too high and aggregate spending was too low.
This meant other tools were needed, and one was ‘forward guidance’ about policy – more explicit statements about the future path of interest rates.
How Hall and Woodford's work on microfoundations won Nobel Prize
Robert Hall and Michael Woodford, who are both Americans, have been recognised for their work helping global policymakers to smooth out the highs and lows of economic cycles, through a branch of economics known as the New Keynesian paradigm.
Their models have “significantly improved our ability to implement effective stabilisation policy”, the Royal Swedish Academy of Sciences say.
This has allowed “well-timed fiscal and monetary policy measures” to reduce the economy’s peaks and troughs.
This work built on John Maynard Keynes’s work showing how policymakers could stimulate demand when it is too low and slowing it when it’s too high.
Keynes’s work struggled during the oil crises of the 1970s, which strained its assumption that the relationship between the macroeconomic variables was stable.
Hall and Woodford, though, showed that such models have to be built on microfoundations- ie, from the bottom up, based on the behaviour of individual actors.
The Royal Swedish Academy of Sciences say:
Explaining why Hall and Woodford have won the biggest prize in economics, the Royal Swedish Academy of Sciences say:
Nobel Prize for Economics awarded to Hall and Woodford
Newsflash: The Nobel Prize for economics has been awarded to Robert E Hall and Michael Woodford, for their work on the “microeconomic foundations of macroeconomic stabilisation”.
[Reminder: As we flagged earlier, Woodford was among the predicted winners – he’s one of the architects of modern forward guidance, the idea that central banks can control the economy through influencing public expectations about inflation, rather than just through interest rates.]
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel is worth 12 million Swedish kronor (£900,000), plus the glory of course, and the knowledge that every pronouncement you make now comes with the authority of a Nobel Prize winner.
Watch the Nobel economics prize announcement here
The winner of the Nobel memorial prize in economics, the final award in this year’s cycle, is expected to be announced in around 10 minutes time.
You can watch the announcement, at the Royal Swedish Academy of Sciences in Stockholm, here:
Reminder: The prize is formally known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Sweden’s central bank established it in 1968 as a memorial to Nobel, the 19th-century Swedish businessman and chemist who invented dynamite and established the five Nobel Prizes.
AFP: Nobel watchers guess who gets economics' top prize
Monetary policy, technology, behavioural economics and development are among the fields tipped for this year’s Nobel economics prize, the AFP newswire report.
Last year, the economics award went to American-Israeli Joel Mokyr, France’s Philippe Aghion and Canada’s Peter Howitt for research into how technology drives and affects growth.
That makes another prize for the same field unlikely this year, according to experts interviewed by AFP.
“There is obvious horse-trading between factions in the (Nobel) committee: ’I support your candidate this year if you support mine next year,’” Richard Tol, an economics professor at the University of Sussex, told AFP.
For Tol, the committee has been “signalling” that Americans Colin Camerer and George Loewenstein will win this year, “perhaps with Matt Rabin”, pioneers in behavioural economics and how we make decisions.
Another “strong candidate” is Michael Woodford in the field of monetary policy, said David Pendlebury of research firm Clarivate, which predicts potential laureates by tracking highly cited academic work.
“It has been a while since that particular area has been recognised,” Pendlebury noted.
Looking at past laureates also shows that the Nobel committee tends to honour research about 20 to 25 years after publication, and Woodford’s key work was “a book published in 2003”.
