2026 Nobel in Economics: Americans Robert Hall and Michael Woodford Honored for Their Macroeconomic Research

Two American economists honored

Le Monde announced on October 12, 2026 that the 2026 Nobel Prize in Economics was being awarded to Americans Michael Woodford and Robert Hall. BFM Business reports that the award, presented by the Swedish central bank in honor of Alfred Nobel, recognizes two specialists in macroeconomics.

Still according to BFM Business, the two laureates did not directly co-author any research. They nonetheless belong to the same school of thought, centered on renewing public policy in times of crisis.

Robert Hall: consumption and expectations

According to BFM Business, Robert Hall, a professor at Stanford, is honored mainly for his work on demand. In a 1978 paper, he challenged the long-standing idea that households' resources determine their level of consumption, which he considers mistaken.

The outlet reports his reasoning: consumption is very hard to predict, because households spread their spending over their entire lives, taking their long-term income into account. That income changes only with unpredictable events, such as a layoff or a promotion.

As a result, according to BFM Business, households' expectations about prices and their incomes weigh more than their current income. Measures that temporarily raise incomes therefore do not strongly change demand and do not make it possible to get out of a crisis.

Michael Woodford: supply and price setting

BFM Business indicates that Michael Woodford shares this view but focused on supply. The Academy, cited by the outlet, considers that he provided "microeconomic foundations" for macroeconomic stabilization policies.

A professor at Columbia University, he published in 2003 the book Interest and Prices: Foundations of a Theory of Monetary Policy, in which he advances a new conception of monetary policy. According to BFM Business, he argues there that firms set their prices imperfectly, based on what they expect their costs to do. The outlet illustrates the point with an ice cream vendor who prints a menu at the start of the season with prices meant to hold all summer.

An effect on central banks

According to BFM Business, Michael Woodford himself explained, on the morning of the announcement, that these ideas had shaped the actions of the Fed and the ECB following the 2008 financial crisis.

The outlet cites "forward guidance": a central bank does not limit itself to raising or lowering its rates, it also clarifies its intentions. BFM Business explains that the goal is to reassure market participants, particularly businesses, so that they do not become overly cautious or pessimistic for lack of visibility.

Analysis: expectations as the common thread

This analysis relies solely on the elements reported by BFM Business. The two laureates study distinct aspects: household demand for one, prices set by firms for the other. In both cases, economic agents' expectations occupy a central place, which sheds light on the link the outlet draws between them.

One limitation applies: the Le Monde article could only be consulted by its headline. The details of the work therefore come from a single source, BFM Business.