Bernanke in three-way share of Nobel prize
Former Fed chairman wins economics award for explaining the role of banks during crises
The Nobel Prize for economics has been jointly awarded to three United States-based economists, Ben Bernanke – a former chairman of the US Federal Reserve – Douglas Diamond and Philip Dybvig for their contributions on explaining the role of banks in the economy, the Royal Swedish Academy of Sciences said yesterday.
The trio had “significantly improved our understanding of the role of banks in the economy, particularly during financial crises, as well as how to regulate financial markets”, the jury said.
“Their analyses have been of great practical importance in regulating financial markets and dealing with financial crises”, the committee said, adding their research had shown “why avoiding bank collapses is vital”.
“Ben Bernanke, in a paper from 1983 showed with statistical analysis, and historical sources, that bank runs led to bank failures and this was the mechanism that turned a relatively ordinary recession into the depression in the ‘30s, the world’s most dramatic and severe crisis that we have seen in the modern history,” said John Hassler, a member of committee for the Nobel Prize for economics.
Bernanke, 68, along with Diamond, 69, a professor at the University of Chicago, and Dybvig, 67, a professor at Washington University in St Louis, were honoured for showing how “banks offer an optimal solution” for channelling savings to investments by acting as an intermediary.
They join previous winners of the prize Paul Krugman and Milton Friedman. Most previous laureates have been from the US. Only two women have ever won, Elinor Ostrom in 2009 and Esther Duflo in 2019.
Last year, half of the award went to David Card for his research on how the minimum wage, immigration and education affect the labour market.
The other half was shared by Joshua Angrist and Guido Imbens for proposing how to study issues that do not easily fit traditional scientific methods.
The prize is the last of this year’s crop of Nobel awards and sees the winners share a sum of 10 million Swedish crowns (HK$7.06 million).
The prize for economics, set up by the Swedish central bank, was the only award absent from the original five created by Alfred Nobel, sometimes earning it the moniker of “false Nobel”.