Three Americans, including a former chairman of the Federal Reserve, were awarded the Nobel Prize in economic sciences on Monday for research showing “why avoiding bank collapses is vital,” the Swedish Academy said.
Ben Bernanke, whose stint with the Federal Reserve spanned parts of George W. Bush and Barack Obama’s presidencies, received the coveted annual honor with economists Douglas W. Diamond of the University of Chicago and Philip H. Dybvig of Washington University.
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“Financial crises and depressions are kind of the worst thing that can happen to the economy,” John Hassler, whose committee handles the prize, said Monday.
“These things can happen again. And we need to have an understanding of the mechanism behind those and what to do about it. And the laureates this year provide that.”
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From left, Tore Ellingsen, Hans Ellegren and John Hassler members of the Royal Swedish Academy of Sciences announce the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2022, during a press conference at the Royal Swedish Academy of Sciences in Stockholm, Sweden, Monday, Oct. 10, 2022. From left on screen Ben S. Bernanke, Douglas W. Diamond and Philip H. Dybvig have been awarded 2022’s Nobel Prize in economic sciences. (Anders Wiklund/TT/AP)
Bernanke demonstrated the correlation between bank collapses and economic crises through his studies of the U.S. Great Depression, releasing a paper in 1983 rethinking a previous notion that the era’s financial issues stemmed from the U.S. not printing enough money.
He was the 14th chairman of the Federal Reserve and held the role from 2006 to 2014.
Dybvig and Diamond, meanwhile, offered insight into how issues can be prevented through the government guaranteeing deposits.
“Probably the most gratifying thing for us is that policymakers actually seem to understand it, and the insights that we had, which are pretty simple, could be used in the actual financial crisis,” Diamond told The Associated Press.
With News Wire Services
Nobel Prize in economic sciences goes to three Americans
