“Economic stability through better communication”

Recognized with the 17th BBVA Foundation Frontiers of Knowledge Award in Economics, economist Michael Woodford explains how his work modernized macroeconomic modeling by incorporating imperfect competition and price and wage rigidities, demonstrating that monetary policy can decisively influence real economic activity. He highlights the importance of forward guidance—the communication of central banks’ future policy plans—as a key tool, especially after the 2008 financial crisis and during disruptions such as the COVID-19 pandemic, to help stabilize economies when traditional interest rate cuts are no longer sufficient.

The BBVA Foundation Frontiers of Knowledge Award in the Economics, Finance and Management category in this seventeenth edition has gone to Professors Olivers Blanchard, Jordi Galí and Michael Woodford for “profoundly influencing modern macroeconomic analysis by establishing rigorous foundations for the study of business cycle fluctuations.”