Robert E. Hall ( Robert E . Hall ) and Michael Woodford ( Michael Woodford ) were awarded the Nobel Memorial Prize in Economic Sciences on Monday in recognition of their contributions to the models used by central banks and governments to “smooth” economic cycles of prosperity and depression.

These scholars, both born in the United States, were awarded together in recognition of their contributions to the "microeconomic foundations" that contribute to macroeconomic stability.

The Swedish Central Bank commemorates the establishment of the Alfred Nobel Prize in Economics in 1968. The winners divide the prize money of 12 million Swedish kronor (approximately 1.2 million US dollars) equally.

Hall was born in California and is a professor at Stanford University; Woodford was born in Massachusetts and is a professor at Columbia University.

"With them, we will be better equipped to cope with shocks in the economy, such as energy crises or sudden changes in household consumption," said John Harsler ( John Hassler ), chairman of the Nobel Committee in Economic Sciences, in a statement.

In a statement, the Royal Swedish Academy of Sciences stated that Hall and Woodford did not focus solely on macroeconomic variables such as inflation, output, and consumption, but rather demonstrated how the combined effects of individual households and businesses influence the economy through their forward-looking decisions. They also proved that communication between central banks and governments “affects this view of the future and directs the economy in the right direction.”

The Academy of Sciences added, "Based on these models, timely fiscal and monetary policy measures can reduce the peaks and troughs of the economy."

"Since the launch of these new models, they have been very helpful in dealing with the economic downturn that affects us."

The Economics Memorial Prize is the last award to be announced. The Nobel Prizes that have been announced earlier include the Prize in Physiology or Medicine, the Prize in Physics, the Prize in Chemistry, the Prize in Literature, and the Peace Prize.

This year's award recipients also include Navanethem "Nancy" Pelle ( Navanethem “ Navi ” Pillay ), who was awarded the Nobel Peace Prize on Friday in recognition of her work promoting peace and international law; as well as Canadian poet and writer Anne Carson ( Anne Carson ), who received the Literature Prize for her "bold and creative works".