On 12 october, the results of the 2026 nobel prize in economics were announced, and professor robert e. Hall of stanford university and professor michael woodford of columbia university became the 100th and 101st winners of the award, as well as the award of the nobel prizeMacroeconomicsThe microeconomics underpinning stabilization policies。
At the launch, the nobel prize board produced a small cartoon that clearly explained the economic contribution of the award-winning experts: there were three markers on a black box with the word “inflation” “output” on the “interest rate”; the picture turned around and the box was opened, under the table, bedroom, baby car, representing the lives of ordinary people。
"we now know what's underneath the hood." “the theoretical framework of hall and woodford allows us to understand the economic cycle in greater depth and to come up with more robust policy recommendations”, said nobel committee member timo poppat
According to the academic community, the main contribution of the two scholars is to bridge the logical chain between micro-individual behaviour and macroeconomic volatility and to modernityMonetary policyI don't knowFiscal policyDesigning a core analytical tool. “in the midst of global inflation and growth dynamics, the study has a strong and realistic reference, and the nobel prize reaffirms the macro-level approach to research based on the real world, service policy practice.” jockey, founding director of the national institute for research and new economic studies, said。
Open the macroeconomic “engine cap”
What does the nobel committee refer to as “macroeconomics underpinning macroeconomic stabilization policies”? This starts in the 1970s。
At a time when europe and the united states were trapped in a stagnating crisis, keynesianism exposed the “kills”: macro-economicists robert lucas and others pointed out that keynesians often used past statistics to guide future policy-making, as if they were just looking at rear-view mirrors driving — how do you know if they don't turn around
Starting with the “lukas criticism”, people began to explore more macro-policy thinking. Among them, hall and woodford advocated the analysis of microeconomic behaviour in the “black box” of economic data, as the nobel committee called it, “opening the macroeconomic `engine cover' and building the foundations of microeconomics”。
Of these, hall's most well-known research can be popularly summed up as “how to predict consumption”. And the answer that hall gave in 1978 was a shock to the entire western economic community: consumption changes are unpredictable。
In hall's theory, if you've learned now that next year's pay raise, you'll probably come down tonight and celebrate. “pay money” had appeared before the real money and silver came to us; once the pay increases were in your pocket, you would save the money, and “pay money” would not happen。
According to hall, this phenomenon shows that changes in individual consumption behaviour are information-driven and that information cannot be predicted, so that changes in consumption are unpredictable. In 1978, hall used various economic data from the united states to test consumption changes, showing that no variable was decisive in predicting consumption。
Following hall's theoretical model, the economics community has increased its focus on the supply side from the consumption side. And nowProjectedThe concept has been refined, and does it affect, and how does it affect, the conduct of business
At the nobel prize for economics launch, boapat presented a “menu” full of ice cream and its prices. Bopat explained that reprinting the menu was cumbersome and expensive and that once the boss set the price, the price would not be changed from three to five times, so the price would be “kick”。
The explanation and application of price stickyness is the area of expertise of another winner, michael woodford. According to woodford and others, the owner of the ice cream shop had to consider the whole summer before making the menu, and would not wait for the price of milk and the man's wages to rise. At the same time, price changes brought about by changes in interest rates are clearly one of the price-fixing considerations, which creates a catch for “visible hands” to guide the market economy。
“this theory answers a central question: how the behaviour of millions of ordinary families, individual businesses can be combined to magnify economic prosperity or downward fluctuations across society, and how the monetary and fiscal policies of the government can be precise in dealing with fluctuations.” joker said。
Installation of reliable “manipulation poles” for economic policy
Woodford was an important economist who could not be bypassed by the reference to “counter-cyclical fluctuations in monetary and fiscal policies”. In today's economic activities, the answers to many fundamental questions are relevant。
For example, why do all central banks use interest rates and interest rates as a policy tool, while no one cares “how much is on the market”? It is woodford who proved with a core set of equations that the mechanism of monetary policy is interest rates, which have nothing to do with monetary aggregates, laying the foundation for “monetary economics without money”。
Woodford also generated new ideas around the interest rate tool. “the hole and woodford framework incorporates these micro-mechanisms of household consumption decision-making, corporate pricing behaviour, market price fixation, and public inflation expectations into the macro-analysis framework to renew the modern new keynes macroeconomic paradigm.” jockey says。
In short, the two economists succeeded in installing interest rates, households and businesses into a “machine”. Since households and businesses have to look to the future for money, interest rates and other instruments play the role of “the future”. Thus, the macroeconomic “black box” not only opens the “engine cap”, but also has a reliable “manipulation pole”。
The idea of regulating the economy through interest rates began at the end of the nineteenth century with the assumption made by economist vixer; chen liang, an associate professor at the international finance school of nakayama university, argued that, thanks to the anticipated progress in research, woodford had not only further clarified the rationale for policy instruments but had also further developed more sophisticated policy tools such as “forward guidance”。
What is “forward-looking guidance”? In general, it is the central bank that not only announces interest rates at this moment, but also promises “what will be the level of future interest rates” to provide immediate expectations of stability for households and businesses, allowing rational economic decision-making。
Woodford also shared a classic example of forward-looking guidance during the awards launch: following the 2009 economic crisis, the fed lowered interest rates to near zero – monetary policy was out of “cards” under the traditional framework, but unemployment in the united states remained high, and additional tools were urgently needed。
“in the new framework, the government has made a clearer statement on the possible path of future interest rate policies, not only relying on an immediate further reduction.” woodford believes that this forward-looking guidance, while not becoming a “miracle” of a direct solution to the economic crisis, does contribute to better stability。
"the nobel prize values the time of research." jockey says. During the european debt crisis in 2012, the statement of then ecb president draghi “at all costs” was also a forward-looking guide, with good results. To date, forward-looking guidance has become an essential tool in the “toolbox” of conventional monetary policy between the united states and europe。
“the contributions of hall and woodford together form the theoretical core of the macroeconomic model of contemporary central banks and the fiscal sector.” chen liangen said that the results of the two-person study had led to a shift in stabilization policies from empirical rules to micro-based structural analysis, which had significantly improved the ability to respond to major macro shocks。
To tame the economic cycle beast
As a result, the economic model constructed by hall and woodford has somewhat ironed the volatility of the economic cycle, thereby mitigating its impact on western societies. By contrast, the cycles of the great depression and the stagnating crisis of the last century, like flood beasts, have brutally struck the fragile bottom of society in the capitalist world。
“thus, the introduction of the new frameworks for hall and woodford was quickly adopted by policymakers around the world.” the permanent secretary of the royal swedish academy of sciences, moones, commented, “we now see it being actively used in many countries to tame this `beast' of the economic cycle”
It's “train”, not “kill” “expulsion”, and it's very precise. While economists such as hall and woodford have proposed a series of theoretical models that have eased the economic cycle problem, in the capitalist state apparatus, represented by the united states and the west, there has always been no solution to this scourge。
“in the context of the digital economy, where ai has become a hotspot, the nobel prize for economics has returned to hard-core issues of global concern, such as macro-stabilization, monetary policy and so forth, suggesting that classic problems still hold a strong real life。
The current global economy, as analysed by jockey, is in a real environment with a high demand for macro-stability theory, with the world generally facing problems of split growth, inadequate demand, high interest rates, high inflation in europe and the united states, and zero-interest-rate constraints in some economies, as well as the common dilemma behind how to use monetary and fiscal instruments。
Chen liang has observed that china’s introduction of “stable employment, steady business, stable markets, steady expectations” and its medium- and long-term planning, five-year planning, etc. Play an important role in managing expectations. “for chinese residents, income and employment expectations are much more transmitted to consumption than inflation expectations; the harmonization of monetary policy with fiscal and industrial policies will have a more positive impact on the formation of household expectations.”。
The “china programme” has grown in visibility and has also received attention from nobel laureates for economics. During the launch, woodford gave a televised interview about china, which was impressed by the development of technology, such as chinese artificial intelligence. “china can contribute significantly to global economic development in the coming decades.” woodford said。
South + reporter shaoichi hiro huang shu ho
Plan: wu chul, peng xiaofy
Photo: xinhua
