Why it is in the news
On Monday, 12 October 2026, the Royal Swedish Academy of Sciences announced the 2026 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to US economists Robert E. Hall (Stanford University) and Michael Woodford (Columbia University) “for microeconomic foundations of macroeconomic stabilisation”. The prize carries 12 million Swedish kronor (about $1.2 million) and was the last of the year’s announcements. John Hassler, chair of the Committee for the Prize in Economic Sciences, said the laureates’ work gave “a stable theoretical foundation for the models that are now used by central banks”, leaving economies better equipped to deal with shocks such as energy crises and sudden shifts in household spending.
The exam angle
Issue: Does a prize honouring microfounded stabilisation models vindicate the way central banks and finance ministries set policy, or does it highlight how much policy still depends on assumptions about household and firm behaviour that shocks can overturn?