City Journal, a publication of the Manhattan Institute, addresses urban policy issues. Recently, economists Robert E. Hall and Michael Woodford received the 2026 Nobel Prize in Economics. They were recognized for their contributions to ‘microeconomic foundations of macroeconomic stabilisation.’
Hall and Woodford developed models that are now fundamental for modern central banks in their efforts to stabilize the economy. These models redirect the focus of macroeconomic policy from broad economic indicators, such as inflation and unemployment, to the decision-making processes of individuals.
Their work has transformed economic policy by stressing the importance of understanding individual behaviors within the economy. This approach allows policymakers to tailor strategies more effectively, potentially leading to more stable economic outcomes.