American-born economists Robert E Hall and Michael Woodford were awarded the Nobel Memorial Prize in Economic Sciences on Monday for their research on the microeconomic foundations of macroeconomic stabilisation.

Hall is associated with Stanford University in California, while Woodford is affiliated with Columbia University in New York.

“The laureates' work has provided us with a stable theoretical foundation for the models that are now used by central banks and governments around the world,” John Hassler, chair of the Committee for the Prize in Economic Sciences, said in a news release.

Their research has strengthened economists' ability to understand and respond to economic shocks, including energy crises and sudden shifts in household consumption, Hassler said. The award's formal name is the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel.