“That insight has affected economists’ thinking ever since.We think there might be a better match for your location and language :) You can set these below for local prices and the fastest delivery. “Ben Bernanke’s 1983 paper was startlingly original and of enduring importance - not in explaining how the Great Depression started, but in explaining why it lasted so long,’’ said former Fed Vice Chair Alan Blinder, an economist at Princeton University. “The result,’’ the Nobel committee wrote, “was the worst global recession in modern history.’’ Panicked savers pulled money out of rickety banks, which then could not make the loans that kept the economy growing. The problem, he found, was the collapse of the banking system. Bernanke agreed but found that the shortage of money could not explain why the depression was so devastating and lasted so long. In a groundbreaking 1983 paper, Bernanke explored the role of bank failures in deepening and lengthening the Great Depression of the 1930s.īefore that, economists cast blame on the Fed for not printing enough money to support the economy as it sank. The Fed also pushed long-term interest rates to historic lows, which led to fierce criticism of Bernanke, particularly from some 2012 Republican presidential candidates who said the Fed was hurting the value of the dollar and running the risk of igniting inflation later.Īnd Bernanke's unprecedented activism at the Fed established a precedent for the central bank to respond with speed and force to economic shocks.īernanke said he and his wife had turned off their cellphones last night and learned about the Nobel when their daughter called with the news. Collectively, those steps calmed investors and fortified big banks - and were credited with avoiding another depression. He slashed short-term interest rates to zero, directed the Fed’s purchases of Treasury and mortgage investments and set up unprecedented lending programs. Treasury Department to prop up major banks and ease a shortage of credit, the lifeblood of the economy. The trio's research took on real-world significance when investors sent the financial system into a panic during fall 2008, prompting the longest and most painful recession since the 1930s.īernanke, then head of the Fed, teamed up with the U.S. He was Fed chair from early 2006 to early 2014 and is now with the Brookings Institution in Washington.
And the laureates this year provide that.”īernanke, 68, examined the Great Depression of the 1930s when he was a professor at Stanford University, showing the danger of bank runs - when panicked people withdraw their savings - and how bank collapses led to widespread economic devastation.
“We need to have an understanding of the mechanism behind those and what to do about it. “Financial crises and depressions are kind of the worst thing that can happen to the economy," said John Hassler of the Committee for the Prize in Economic Sciences. Their findings in the early 1980s laid the foundations for regulating financial markets, the panel said. Diamond and Philip Dybvig on Monday for research that shows “why avoiding bank collapses is vital.” The Nobel panel at the Royal Swedish Academy of Sciences recognized Bernanke, Douglas W. STOCKHOLM – Former Federal Reserve Chair Ben Bernanke and two other U.S.-based economists won the Nobel Prize in economics for research into bank failures - work that built on lessons learned in the Great Depression and helped shape America’s aggressive response to the 2007-2008 financial crisis.
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