Nobel Prize in economics goes to 2 Americans

Stockholm — American-born economists Robert E. Hall and Michael Woodford won the Nobel memorial prize in economics on Monday for their work on models that have helped governments and central banks manage economic shocks.The Royal Swedish Academy of Sciences announced the winners in Stockholm, saying the winners were being honored "for microeconomic foundations of macroeconomic stabilisation." "The laureates have helped us smooth out the economy's peaks and troughs," the academy said in a statement. Hall, 83,is affiliated with Stanford University in California and Woodford, born in 1955, is affiliated with Columbia University in New York.Woodford spoke to the committee by phone Monday from New York, saying: "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," John Hassler, chair of the Committee for the Prize in Economic Sciences, said in a news release.

"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." For decades, governments responded to economic shocks by following the Depression-era prescriptions of British economist John Maynard Keynes: Intervene in the economy by lowering taxes and hiking government spending, thereby encouraging consumers and businesses to spend and invest themselves and