Americans Robert Hall and Michael Woodford win economics Nobel Prize

American economists Robert Hall and Michael Woodford were awarded the Nobel economics prize Monday for their work on how monetary and fiscal policy can help stabilise fluctuations in the economy.

"The laureates' work has provided with a stable theoretical foundation for the models that are now used by central banks and governments around the world," the jury at the Royal Swedish Academy of Sciences said in a statement.

"With them, they 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 prize committee, also said in the statement.

During the oil crises in the 1970s, the existing Keynesian models long used to determine when and how measures should be implemented to tackle recessions or other economic fluctuations no longer worked. That prompted Hall and Woodford to develop new tools for understanding which policy responses could be the most effective.