US researchers win economics Nobel for work on macroeconomic stability

The Nobel prize in economics has been awarded to US researchers Robert E Hall and Michael Woodford for their work on macroeconomic stability.

The work by Hall, based at Stanford University, and Woodford, based at Colombia University, had led to a greater understanding “for how the total mass of individual households and businesses affect the economy through their actions,” the Royal Swedish Academy of Sciences said on Monday.

“The laureates’ work has provided us with a stable theoretical foundation for the models that are now used by central banks and governments around the world,” said John Hassler, chair of the Committee for the Prize in Economic Sciences.

With these models, the world is “better equipped to deal with shocks in the economy, such as energy crises or sudden changes in how much households consume,” he said.

On the basis of Hall and Woodford’s research, “well-timed fiscal and monetary policy measures can reduce the economy’s peaks and troughs,” the Nobel committee said.