The Nobel in economics to three Americans, including former Fed Chairman Ben Bernanke

The Nobel in economics to three Americans, including the former Fed Chairman Ben Bernanke

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The Nobel Prize in Economics was awarded on Monday to Ben Bernanke, the former chairman of the US central bank (Fed), and his compatriots Douglas Diamond and Philip Dybvig, for their work on financial crises and banks.

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

“An important discovery of their research,” whose work begins from the 1980s, “has been to show why avoiding bank collapse is vital,” the committee added. 

Aged 68, Ben Bernanke was the head of the Federal Reserve (Fed) between 2006 and 2014, a tenure marked by the 2008 financial crisis and the fall of the American bank Lehman Brothers.

He notably analyzed the Great Depression of the 1930s, the worst economic crisis in modern history. In particular, he showed how massive withdrawals were a decisive factor in prolonging and worsening crises.

Douglas Diamond and Philip Dybvig have developed theoretical models showing why banks exist and why their role in society makes them vulnerable to rumor about their impending collapse. 

Like other Nobel Prizes, the prize is endowed with 10 million Swedish crowns (920,000 euros), to be shared in the event co-winners. 

Created by the Bank of Sweden, the economics prize “in memory of Alfred Nobel” was added in 1969 to the five traditional prizes (medicine, physics, chemistry, literature and peace) more than sixty years after the others, earning him among his detractors the sobriquet of “false Nobel”.