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GBP/USD
• NeutralRelevance: low
| Market | Currencies |
|---|---|
| Close on 10/27/2026 | 1.33072 |
| Change that session | -0.26% |
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Michael Roberts' critique argues that this year's Nobel economics prize, awarded to Robert Hall and Michael Woodford for models helping governments and central banks stabilise the economy, is unwarranted. The Nobel Academy claimed their models provide a stable theoretical foundation and help smooth economic peaks and troughs, but the author questions whether these models have actually improved policy decisions. He traces the New Keynesian school to the failure of Keynesian macro-management in the 1970s and its shift to microfoundations and DSGE models. Roberts argues these models failed to predict the great recession (2007-09) and could not explain the weak recovery that followed.
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The editorial examines the research of this year's Nobel economics laureates, Robert E. Hall and Michael Woodford, which shows that stabilization policy depends on household and firm expectations as well as how central banks communicate with the public. Hall found that spending depends on expectations of one's financial situation rather than only current income, and that lower-income households spend a larger share of income gains, so targeted support could be more effective. Woodford found that firms set prices based on future costs and competitors' prices, and his work provided the basis for the forward guidance used by many central banks. The editorial argues this research is valuable for central banks and Taiwan's policymakers, and that it contradicts Federal Reserve Chair Kevin Warsh's plan to end forward guidance and shorten post-meeting statements and news conferences.
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