Economics Nobel goes to Robert E. Hall and Michael Woodford for the foundations of stabilising the economy

The prize was announced on Monday in Stockholm. The Academy said the two economists' models have significantly improved our ability to conduct effective stabilisation policy. On that basis, governments and central banks can respond in time with fiscal and monetary policy and smooth out economic booms and downturns.

Who the laureates are

Robert E. Hall was born in 1943 in Palo Alto. He teaches at Stanford University and is a fellow of the Hoover Institution. He is known for a 1978 paper showing that, under rational expectations, changes in consumption should be unpredictable. He has also studied the labour market and co-designed the Hall–Rabushka flat tax. For many years he led the NBER committee that dates US recessions.

Michael Woodford, born in 1955, is a professor at Columbia University. His 2003 book "Interest and Prices" is regarded as the standard reference on monetary theory. With Julio Rotemberg he developed the New Keynesian model of the economy, and later worked on inflation-targeting rules.

Favourites and prize money

Woodford was on Clarivate's September list of "Citation Laureates". The Kalshi betting market had favoured Ariel Pakes and Susan Athey. The prize is SEK 12 million, a million more than last year.