Americans Robert E. Hall and Michael Woodford won the Nobel Memorial Prize for studying the economy. Their work helps governments deal with problems such as rising prices.
Hall studied how people choose to spend or save money. People spend more when they expect to earn more in the future. But their hopes can change quickly. This makes future spending hard to predict. Woodford studied how businesses choose prices. They also think about the future cost of borrowing money.
Woodford’s work shows why banks such as the U.S. Federal Reserve should clearly explain their plans. These banks help guide the economy. But Federal Reserve leader Kevin Warsh thinks they now say too much. He wants the bank to say less about its plans.
