What Made Ben Bernanke An Interesting Choice To Win The Nobel Prize?

Ben Bernanke, the former US Federal Reserve, Chair Person, on Monday along with Douglas W. Diamond and Philip H. Dybvig won the Nobel Prize in economic sciences.

Bernanke, was the Chair Person of the US Federal Reserve at the most difficult period of US economy of the last few decades. In fact, in his book Courage to Act, he revealed that the world's economy came close to collapse in 2007 and 2008. We all know what happened after the Lehman Brothers crisis, and how the global economy went into a complete tailspin.

Bernanke, put all his academic expertise to work in reviving the American economy after the 2007-2008 financial crisis. He along with other US Fed officials, took interest rates to zero and began quantitative easing measures that got the US economy out of the conundrum, after which the world economy followed. Ben Bernanke was instrumental in getting the US Fed Funds rates from 5.25% to 0.0% within less than a year. Under his leadership, the US Fed initiated quantitative easing, creating $1.3 trillion from November 2008 to June 2010 and using the created money to buy financial assets from banks and from the government.

Ben Bernanke has great interest in the economic and political causes of the Great Depression, on which he has published numerous academic journal articles.
The Nobel panel at the Royal Swedish Academy of Sciences in Stockholm said the trio's research had shown "why avoiding bank collapses is vital." With their findings in the early 1980s, the laureates laid the foundations for regulating financial markets, the panel said.
"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. "These things can happen again. And we need to have an understanding of the mechanism behind those and what to do about it. And the laureates this year provide that."

Bernanke, 68, now with the Brookings Institution in Washington, examined the Great Depression of the 1930s, showing the danger of bank runs - when panicked people withdraw their savings - and how bank collapses led to widespread economic devastation.
Before Bernanke, economists saw bank failures as a consequence, not a cause, of economic downturns. Diamond, 68, based at the University of Chicago, and Dybvig, 67, who is at Washington University in St. Louis, showed how government guarantees on deposits and can prevent a spiralling of financial crises.

In 1983, they co-authored "Bank Runs, Deposit Insurance, and Liquidity," which in part addressed damage from runs on banks.
With inputs from AP/PTI