The Royal Swedish Academy of Sciences has awarded the 2026 Sveriges Riksbank Prize in Economic Sciences to two U.S. economists, Robert E. Hall and Michael Woodford.

The shared award recognised Messrs Hall and Woodford “for microeconomic foundations of macroeconomic stabilisation.”

The duo revamped British economist John Maynard Keynes’s 1930s policies, which could no longer address the modern-day challenges faced by households and businesses.

The Nobel organisation said Messrs Hall and Woodford created a framework that explained why Mr Keynes’s policies stopped working and established a connection between households and businesses, particularly how decisions taken in these units can influence the economy.

“We are better equipped to deal with shocks in the economy, such as energy crises or sudden changes in how much households consume,” John Hassler, chair of the Committee for the Prize in Economic Sciences, said on Monday, praising the duo.

Mr Woodford’s 2003 book “Interest and Prices: Foundations of a Theory of Monetary Policy”, which contained research and contributions from Mr Hall, was considered for the Nobel Prize.

Mr Hall, 83, is a professor of economics at Stanford University, while Mr Woodford, 71, is a professor at Columbia University.

“It’s a tremendous honour,” Mr Woodford said. “It’s a surprise, but I feel very good about it.”

They will both share the 12 million Swedish kronor prize, equivalent to $1.3 million or N1.7 billion.