Two decades before winning this year’s Nobel Prize in economics, US-born economist Michael Woodford was influential in shaping policy at the People’s Bank of China through his landmark models on economic downturns.

In 2005, Woodford delivered a speech titled “Economic Literacy, Central Bank Communication, and Macroeconomic Stability” at a forum in Beijing, with tickets highly sought after, according to a report by state-owned China News Service at the time.

Xie Ping, a professor at the Graduate School of the PBOC at that time, chaired the session, which was attended by economic-administration officials and other participants.

At the time of the Beijing speech, state broadcaster China Central Television reported that Woodford believed greater scope and sophistication in US and UK central banks’ communications with the public had fostered more knowledgeable and well-informed participants in economic markets.

“For China to achieve this, it needs stronger economic research and better economic training,” he suggested at the time.

Eight years later, in its second quarter 2013 Monetary Policy Implementation Report, the PBOC showed that it had taken note.

“As Columbia University professor Michael Woodford put it, once rates hit the lower bound and nominal interest rates remain flat for an extended stretch, public expectations materially shape economic outcomes, making central bank guidance far more important,” according to the 2013 report.

On Monday, Woodford and Robert E. Hall were awarded the Nobel Prize in Economic Sciences for demonstrating how economic models could be reconstructed to revitalise stabilisation policy.

Working independently, the two economists examined factors beyond standard macroeconomic variables such as inflation, output and consumption. They illustrated how households and businesses shape the economy according to their expectations of the future, said the Royal Swedish Academy of Sciences, which presented the award.

Their research highlighted why clear communication of policy plans by central banks and governments matter. Such messaging could “influence this view of the future and move the economy in the right direction” during downturns, the academy said.

Hall, the other Nobel laureate, is a professor at Stanford University. His co-written textbook with John B. Taylor was translated into Chinese and has long been widely used in undergraduate and graduate economics courses across Chinese universities.

“The PBOC has in recent years laid out priorities to build out its policy-rate framework, improve monetary transmission efficiency and better anchor market expectations,” said Sun Lijian, director of Fudan University’s Financial Research Center in Shanghai.

“[Its] approaches align closely with the New Keynesian framework – a result of the two economists’ research.”In a year when artificial intelligence and the digital economy are dominating mainstream attention, the Nobel Prize was awarded to two “old-school” macroeconomic theorists. Sun called this year’s Nobel award a “long-overdue catch-up lesson” amid a “major inflation test”.

“It’s not a reward for innovation. Woodford’s magnum opus was published 23 years ago, while for Hall, it has been 48 years,” he said. “The prize shows their work remains highly relevant for the current times, amid inflation and doubts over policy credibility.”