Robert E. Hall and Michael Woodford were on Monday awarded the Nobel prize in economics for work that underpins the models used by central banks and governments to stabilize periods of boom and bust.
The U.S.-born pair were jointly awarded for their contribution to the "microeconomic foundations" needed to create macroeconomic stability.
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was established by Sweden's central bank in 1968. The winners will split a 12 million Swedish kronor ($1.2 million) prize.
Hall, born in California, is a professor at Stanford University, while Massachusetts-born Woodford is a professor at Columbia University.
"With them, we 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 Committee for the Prize in Economic Sciences, said in a statement.