American Economists Share Nobel Prize
2022-10-11
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1Ben Bernanke, former head of the U.S. Federal Reserve, and two other American economists were awarded the Nobel Prize in Economic Sciences on Monday.
2Bernanke is credited with helping lead the United States out of the 2007-2008 financial crisis.
3The two other winners were Douglas W. Diamond and Philip H. Dybvig.
4The Nobel committee at the Royal Swedish Academy of Sciences said the three financial experts showed "why avoiding bank collapses is vital."
5John Hassler of the prize committee said: "Financial crises and depressions are kind of the worst thing that can happen to the economy."
6The three men worked during their university careers to understand how bank failures can cause economic downturns.
7Before their work, most economists saw bank failures as a result of - but not a cause of - economic problems.
8Research by Diamond and Dybvig in the 1980s showed that governments could provide assistance to protect money in banks and prevent financial crises from getting worse.
9Bernanke did his work at Stanford University before serving as chairman of the Federal Reserve from 2006 to 2014.
10Diamond worked at the University of Chicago and Dybvig at Washington University in St. Louis.
11Diamond told the Associated Press he was "very happy" and "quite surprised" to get the news of his prize win.
12He said it was "gratifying" that the work the economists did was easy to understand by government leaders.
13In addition, the proposed policies "could be used in the actual financial crisis."
14Diamond added that the current financial system is "much less vulnerable" because of the work the economists did in the past.
15The university research proved valuable in 2008 when investors sent the financial system into a panic.
16At the time, Bernanke worked with the U.S. Treasury Department to support major banks and ease a shortage of credit.
17He also pushed interest rates on loans lower and asked the Federal Reserve to buy problematic investments.
18The actions calmed investors and supported large banks.
19The work from 2008 set an example that was used again in 2020 when the world was in the early days of the COVID-19 pandemic.
20World economies slowed down as people were forced to stay home from work.
21At that point, the leader of the Federal Reserve was Jerome Powell.
22Powell cut interest rates and put money into the financial system, which started a fast recovery.
23While those actions steadied the economy, many nations are still worried about rising costs in food and energy.
24The Nobel committee noted a paper Bernanke wrote at Stanford in 1983 about the cause of the Great Depression of the 1930s.
25Allan Blinder, an economics expert at Princeton University, told The Associated Press he considered that paper "startlingly original."
26He said it had played an important part in explaining how the Great Depression started and why it lasted so long.
27Simon Johnson is an economist at the Massachusetts Institute of Technology.
28He said a work by Diamond and Dybvig about how governments can support bank deposits proposed a "very, very powerful idea."
29In addition, Diamond wrote about how banks should play an important part in deciding which projects are "worthy" of being financed.
30Monday's award was the last in a week of Nobel Prize announcements.
31The winners will share a cash prize worth about $900,000 that will be given out at an event on December 10.
32I'm Dan Friedell.
1Ben Bernanke, former head of the U.S. Federal Reserve, and two other American economists were awarded the Nobel Prize in Economic Sciences on Monday. 2Bernanke is credited with helping lead the United States out of the 2007-2008 financial crisis. 3The two other winners were Douglas W. Diamond and Philip H. Dybvig. 4The Nobel committee at the Royal Swedish Academy of Sciences said the three financial experts showed "why avoiding bank collapses is vital." 5John Hassler of the prize committee said: "Financial crises and depressions are kind of the worst thing that can happen to the economy." 6The three men worked during their university careers to understand how bank failures can cause economic downturns. Before their work, most economists saw bank failures as a result of - but not a cause of - economic problems. 7Research by Diamond and Dybvig in the 1980s showed that governments could provide assistance to protect money in banks and prevent financial crises from getting worse. 8Bernanke did his work at Stanford University before serving as chairman of the Federal Reserve from 2006 to 2014. Diamond worked at the University of Chicago and Dybvig at Washington University in St. Louis. 9Diamond told the Associated Press he was "very happy" and "quite surprised" to get the news of his prize win. He said it was "gratifying" that the work the economists did was easy to understand by government leaders. In addition, the proposed policies "could be used in the actual financial crisis." 10Diamond added that the current financial system is "much less vulnerable" because of the work the economists did in the past. 11The university research proved valuable in 2008 when investors sent the financial system into a panic. At the time, Bernanke worked with the U.S. Treasury Department to support major banks and ease a shortage of credit. He also pushed interest rates on loans lower and asked the Federal Reserve to buy problematic investments. The actions calmed investors and supported large banks. 12The work from 2008 set an example that was used again in 2020 when the world was in the early days of the COVID-19 pandemic. World economies slowed down as people were forced to stay home from work. 13At that point, the leader of the Federal Reserve was Jerome Powell. Powell cut interest rates and put money into the financial system, which started a fast recovery. While those actions steadied the economy, many nations are still worried about rising costs in food and energy. 14The Nobel committee noted a paper Bernanke wrote at Stanford in 1983 about the cause of the Great Depression of the 1930s. Allan Blinder, an economics expert at Princeton University, told The Associated Press he considered that paper "startlingly original." He said it had played an important part in explaining how the Great Depression started and why it lasted so long. 15Simon Johnson is an economist at the Massachusetts Institute of Technology. He said a work by Diamond and Dybvig about how governments can support bank deposits proposed a "very, very powerful idea." In addition, Diamond wrote about how banks should play an important part in deciding which projects are "worthy" of being financed. 16Monday's award was the last in a week of Nobel Prize announcements. The winners will share a cash prize worth about $900,000 that will be given out at an event on December 10. 17I'm Dan Friedell. 18Dan Friedell adapted this story for VOA Learning English based on a report by The Associated Press. 19________________________________________________________________________ 20Words in This Story 21vital -adj. extremely important 22gratify -v. to make someone happy or satisfied 23vulnerable -adj. open to attack, harm, or damage 24panic -n. a state or feeling of extreme fear that makes someone unable to act or think normally 25startle -v. to surprise or frighten (someone) suddenly and usually not seriously 26________________________________________________________________________ 27We want to hear from you. Do you think the economists deserved the prize? 28We have a new comment system. Here is how it works: 29Each time you return to comment on the Learning English site, you can use your account and see your comments and replies to them. Our comment policy is here.