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Ben Bernanke Recipient of Nobel Prize in Economics

Ben Bernanke, the US Federal Reserve’s former ea, was one of the Nobel Prize winners in economics.

Philip Dybvig and Douglas Diamond are with Bernanke. The three nominees of the Nobel Prize in Economics were recognized for their work, in particular for their contributions to resolving financial crises.

The Royal Swedish Academy of Sciences stated that the three economists have received the award for their seminal work since the 1980s. The three were crucial in determining whether a bank should exist, according to the academy.

Additionally, it said effective banking administration could mitigate the economic downturn and prevent financial collapse.

Important Roles

Bernanke has studied the Great Depression in detail. For this, he was eventually awarded the Nobel Prize.

Additionally, Bernanke faced the 2008 global financial crisis with his experience and knowledge.

“People had seen that banks fail, but it was more thought [of] as a consequence of the crisis rather than [a] cause of the crisis,” said the Nobel Committee, John Hassler.

“Now the views of Bernanke have become the conventional wisdom.”

Diamond and Dyvbig received the Nobel Prize for their achievements in strengthening the link between the bank, borrowers and savers. The objectives of these organizations are connected, per the two.

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For example, borrowers want to be able to transfer money but want to repay the money in installments, while savers prefer to have extra cash on hand in an emergency. So, per Diamond and Dyvbig, lenders should be in good standing because it can impact their transactions.

At a press conference, Diamond appeared and pointed out that if interest rates rise, UK markets will become unstable. According to him, however, British specialists and economists are sufficiently informed of the lessons learned from the stock market disaster of 2008.

“Recent memories of that crisis and improvements in regulatory policies around the world have left the system much, much less vulnerable,” he said.

Knowledge on Bernanke

Getting to know Bernanke’s achievements better, he was chairman of the Federal Reserve from 2006 to 2014. He was able to successfully stop the negative effects on the US economy while serving as the agency’s director.

As chairman, Bernanke also launched an asset purchase program that would support economic growth. It also improved communication between the public and the central bank.

Bernanke said informing the public about the central bank’s goals and strategies can help both sides manage their finances. These tactics have since become the guidelines currently set by the Fed.

“There’s a lot of question on … the legal ways the US regulators could have resolved Lehman, and some claim it was essentially impossible for them to do it. But had they found a way I think the world would have had less of a severe crisis than it did,” Diamond added.

The Brookings Institution, one of the country’s leading think tanks, now employs Bernanke as a senior fellow. Diamond and Dyvbig are both professors at the University of Chicago and Washington University in St. Louis, respectively.

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