The Nobel in economics to three banking experts, including ex-Fed chief Ben Bernanke

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The Nobel in economics goes to three banking experts, including former Fed chief Ben Bernanke

The trio of winners “significantly improved our understanding of the role of banks in our economy, particularly during financial crises”, said the jury.

Members of the Royal Swedish Academy of Sciences announce the winners of the 2022 Nobel Prize in Economics at a press conference in Stockholm. The winners are Ben S. Bernanke, Douglas W. Diamond and Philip H. Dybvig.

He was one of the great faces of the 2008 financial crisis: the Nobel Prize in Economics was awarded on Monday to Ben Bernanke, the former chairman of the American central bank (Fed), and to his compatriots Douglas Diamond and Philip Dybvig, for their work on banks and their necessary rescue during financial storms.

The ex-central banker, even if he did not prevent the bankruptcy of the American merchant bank Lehman Brothers in 2008, remained in recent economic history as the #x27;helicopter Ben, who opened the financial floodgates of the Fed so as not to reproduce the errors of the too brutal turns of the screw of his predecessors of the 1930s, which had contaminated the stock market slump in production and employment .

The former professor of economics, a specialist in the Great Depression, had left his post at the head of the American Federal Reserve eight years ago when he saw hailed his role in pulling the US economy out of the crisis.

The winning trio have significantly improved our understanding of the role of banks in our economy, particularly during financial crises, as well as how to regulate financial markets, hailed the Nobel jury.

An important finding of their research, whose work begins from the 1980s, was to show why avoiding the collapse of banks is vital, underlined the committee of the Swedish Academy of Sciences responsible for awarding the prize.

Aged 68, Ben Bernanke was chairman of the US Federal Reserve between 2006 and 2014, a tenure marked by the 2008-2009 financial crisis and the fall of the US bank Lehman Brothers.

Former US Federal Reserve Chairman Ben Bernanke

The largest bank failure in US history triggered a global financial crisis and underscored the risk posed by banking giants too big to fail ( too big to fail).

The former central banker analyzed the Great Depression of the 1930s and notably showed that massive withdrawals – the bank runs< /em>(wicket rush) – were a decisive factor in extending and worsening crises.

The jury, however, makes no direct reference to Ben Bernanke's action as head of the Fed in the reasons for awarding his prize.

Douglas Diamond, born in October 1953, and Philip Dybvig, 67, professors at the University of Chicago and Washington University in St. Louis, respectively, have devised theoretical models showing how vulnerable banks can be to the rumor of their impending collapse.

This work led in particular to the Diamond-Dybvig model relating to self-fulfilling bank runs.

On September 15, 2008, Lehman Brothers Bank collapsed and dragged the world economy into an unprecedented recession.

I was sound asleep when on the phone I heard a Swedish voice […]. I wondered if it was genuine, joked Douglas Diamond, recounting how he reacted to the announcement that he had won the Nobel Prize in Economics. Oh, that's not bad! he thought next.

Don't earn it too young, otherwise it will go to your head, added this professor, who says he is obsessed with financial stability and banks.

Asked about the current risks of the financial system, Mr. Diamond acknowledged that the interest hikes currently being carried out by central banks around the world to curb inflation were tantamount to removing liquidity from the system.

Central banks must be careful about the rate at which they reduce this liquidity or else they will face financial crises that will tie their hands and prevent them from achieving their macroeconomic goal, the Nobel Prize winner warned.

The only one not to have been provided for in Alfred Nobel's will was the economics prize created by the Swedish central bank in memory of Nobel. inventor was added in 1969 to the five traditional awards (medicine, physics, chemistry, literature and peace), earning him the nickname of false Nobel among his detractors.

American Elinor Ostrom (2009) and Franco-American Esther Duflo (2019) are the only women to have won the award so far.

The Last year, the American-Canadian David Card, the American-Israeli Joshua Angrist and the American-Dutch Guido Imbe were crowned for their work in experimental economics.

On October 7, the Nobel Peace Prize was awarded to imprisoned Belarusian activist Ales Bialiatski, the NGO Memorial and the Ukrainian Center for Civil Liberties amid Moscow's invasion of Ukraine.

< p class="e-p">On October 6, Annie Ernaux became the first French woman to win the Nobel Prize for Literature, after 15 men.

The Nobel Prize for Medicine got the ball rolling in crowning on October 3 the Swede Svante Pääbo, father of the man of Denisova and cartographer of the DNA of the man of Neanderthal.

That of physics rewarded on October 4 the Frenchman Alain Aspect, the Austrian Anton Zeilinger and the American John Clauser for their discoveries on the revolutionary mechanism of quantum entanglement, proving Albert Einstein himself wrong.

On October 5, a trio of Americans Carolyn Bertozzi and Barry Sharpless and Dane Morten Meldal were crowned in chemistry for the development of click chemistry and of bio-orthogonal chemistry, making Mr. Sharpless one of the few scientists to have won this distinction for a second time.

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