New Delhi, Oct. 13 -- This year's Nobel Prize in Economic Sciences was awarded to Robert E. Hall of Stanford and Michael Woodford of Columbia for providing the "microeconomic foundations of macroeconomic stabilisation."

The citation says it all: the duo developed new macro models "that have significantly improved our ability to implement effective stabilisation policy." Well-timed fiscal and monetary policy measures based on these models "can reduce the economy's peaks and troughs."

As the awarding panel's chair John Hassler noted, the laureates' work has been of good use to central banks and governments in securing an economy from shocks like energy price spikes and sudden shifts in retail demand.

The interesting part this year is the...