Nobel Prize in Economic Sciences 2026:
The Royal Swedish Academy of Sciences awarded the 2026 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (commonly known as the Nobel Prize in Economic Sciences) to two American economists – Robert E. Hall (Stanford University) and Michael Woodford (Columbia University).
- They were honoured “for microeconomic foundations of macroeconomic stabilisation”, demonstrating how individual household consumption trends and business pricing expectations shape broader macroeconomic policies (fiscal and monetary policy).
- Traditional Keynesian models assumed that relationships between macroeconomic variables (like inflation and unemployment) were stable. However, this failed during the 1970s oil shocks, leading to stagflation (stagnant growth, high unemployment, and persistent inflation).
- Economist Robert Lucas (in 1976) argued that human behaviour is not a fixed system.
- When central banks implement policies based on past data, consumers and businesses adapt their behaviour based on the new policies, thereby weakening or altering the intended economic effects.
