Stockholm: American-born economists Robert E. Hall and Michael Woodford were awarded the Nobel memorial prize in economics on Monday for developing theoretical models that assist central banks and governments in managing economic volatility.

The Royal Swedish Academy of Sciences announced the joint winners in Stockholm, citing the duo "for microeconomic foundations of macroeconomic stabilisation."

"The laureates have helped us smooth out the economy's peaks and troughs," the academy said in an official statement accompanying the announcement.

Hall is a professor at Stanford University in California, while Woodford is affiliated with Columbia University in New York.

Speaking to the committee by phone from New York on Monday, Woodford expressed his reaction: "It's a tremendous honor, it's a surprise."

"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 them, we are better equipped to deal with shocks in the economy, such as energy crises or sudden changes in how much households consume."

Formally known as the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, the award was established by Sweden's central bank in 1968 to honor the 19th-century chemist and industrialist who founded the original five Nobel Prizes. While Nobel purists point out that the economics prize is not technically an original Nobel, it is administered by the Nobel Foundation and presented alongside the other awards on December 10, the anniversary of Alfred Nobel's death in 1896.

This conclusion caps the 2026 Nobel announcements, following the presentation of awards in medicine, physics, chemistry, literature, and peace last week. Last year’s economics prize went to three researchers studying business innovation and economic growth.

The award comes with a cash prize of 12 million Swedish kronor (approximately $1.2 million), which will be shared by the laureates.