Robert E. Hall and Michael Woodford Awarded Nobel for Economics
- Stanford and Columbia academics snag top prize for 'stabilization' theory
- Committee claims research helps policymakers handle economic shocks
- Microeconomic foundations: Fancy talk for tinkering with the levers of your paycheck
- Two more American professors join the club of theoretical masters
Brief Summary
Robert E. Hall of Stanford and Michael Woodford of Columbia have been handed the Nobel Memorial Prize in Economic Sciences. The committee claims these two deserve the hardware for their work on 'microeconomic foundations of macroeconomic stabilization,' essentially providing the academic blueprint for how central banks and governments try to smooth out the boom-and-bust cycles that define the modern economy.
Why This Matters
While this sounds like another academic pat on the back, the theories these men developed are the engine room for the policies that dictate your interest rates, inflation levels, and overall purchasing power. When the Federal Reserve or Washington decides to intervene in the market, they are often using the frameworks perfected by thinkers like Hall and Woodford. You feel the weight of their 'stabilization' efforts every time you check the price of groceries or look at your mortgage rate; their ideas are the invisible hand steering the ship you are currently trying to keep afloat.