Three US Economists Nab This Year’s Nobel Prize for Economic Sciences

UTC by Benjamin Godfrey · 3 min read
Three US Economists Nab This Year’s Nobel Prize for Economic Sciences
Photo: Brookings Institution / Flickr

The winners of the Nobel Economics prize are not just experts in their respective spheres but are renowned authorities whose positions and views about current global economic turmoil remain very respected.

The winners of this year’s Nobel Prize for Economics have been announced and three veterans from the United States have emerged as the winners for this year.

As reported by CNBC, the latest Nobel laureates include Ben Bernanke, the chairman of the Federal Reserve from 2006 to 2014, Douglas Diamond, a professor at the University of Chicago Booth School of Business, and Philip Dybvig, a professor at the Olin Business School of Washington University in St. Louis.

The trio was recognized for their exceptional work in depicting the roles of banks and financial institutions during periods of economic crisis. According to the Nobel Committee that selected the trio, their works in the 1980s had “significantly improved our understanding of the role of banks in the economy, particularly during financial crises.”

The committee also revealed that their work shows it is crucial to prevent bank collapses. Their analysis notably came in handy during the 2008 financial crisis as well as the coronavirus pandemic whose aftermath is still being felt to date.

Specifically, Ben Bernanke’s analysis of the Great Depression of the 1930s reveals why and how bank runs were single-handedly responsible for the elongated timeline of the crisis at the time. The work of the duo of Diamond and Dybvig also highlights how there is a constant brawl between customers who need access to their funds and the need for banks to maintain liquidity by keeping savings intact.

Diamond and Dybvig’s research also highlight how the government can help establish the much-needed balance by providing deposit insurance.

As a winner of the historic award, the trio will go home with a prize of 10 million Swedish Krona worth as much as $883,000

Maintaining Strong Opinions

The winners of the Nobel Economics prize are not just experts in their respective spheres but are renowned authorities whose positions and views about current global economic turmoil remain very respected.

Shortly after the announcement of the awards, Professor Diamond was asked whether he has any advice or warnings for banks and the government based on the current economic conditions.

“Financial crises, in the way that Phil Dybvig and I think about them, become worse when people start to lose faith in the stability of the system. And that is all related to basically how profitable they think the banking sector is, in addition to being stable,” Diamond said, “So I guess the best advice is to be prepared for making sure that your part of the banking sector is both perceived to be healthy and to stay healthy and to respond in a measured and transparent way to changes in monetary policy.”

According to him, the banking system of today is better capitalized and has a notably better risk management system borne out of proactive regulations that will generally help forestall any unforeseen circumstances as seen in previous crisis eras.

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Benjamin Godfrey

Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.

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