The Nobel Prize to Hall and Woodford: A Macroeconomic Journey

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2026 has been awarded to Robert E. Hall and Michael Woodford “”for microeconomic foundations of macroeconomic stabilisation.” To gain some intuition for what that actually means, it’s useful to flash back a few decades and remember the origins of “macroeconomics” and how macroeconomic analysis was done a half-century ago. There’s an old phrase about “painting with a broad brush,” when you skip past smaller details. In this brief overview, I intend to go well beyond painting with a broad brush, perhaps closer to painting with an industrial-power spray-gun. Economists have been writing about subjects related to what we now call “macroeconomics” for centuries. But the actual terminology seems to have emerged during the Great Depression, when it became abundantly clear that entire national economies could malfunction at the same time without the occurence of a disaster like a war or pandemic. The great Norwegian…