The Nobel just went to the economists who explain boom and bust. Your mortgage is their lab.

The 2026 Nobel Prize in Economic Sciences went to two American academics whose work quietly runs the modern central bank: Robert E. Hall of Stanford and Michael Woodford of Columbia, honoured for the microeconomic foundations of boom-bust cycles — the basis of the "New Keynesian" models used by central banks and finance ministries worldwide.

The Royal Swedish Academy of Sciences said the pair showed how to rebuild economic models from the ground up — starting from the decisions of individual households and businesses rather than top-down statistical links — so that "well-timed fiscal and monetary policy measures can reduce the economy's peaks and troughs." Committee chair John Hassler said the work leaves policymakers "better equipped to deal with shocks in the economy, such as energy crises or sudden changes in how much households consume."

The Canadian angle is direct: Woodford's framework is the one behind modern interest-rate policy — including the Bank of Canada's. His key insight, that central banks steer the economy by managing expectations about future rates, is the theory underneath every Macklem press conference. With the Bank deciding Oct. 28 amid hot inflation and a cold job market, the laureates' models are the lab equipment.

The prize is 12 million Swedish kronor, about $1.1 million, shared equally. Hall is 83; Woodford is 71.