The committee that awards the Nobel Prize in economics announced Monday it has chosen three U.S. economists for the 2022 prize: former Federal Reserve Chairman Ben S. Bernanke, Douglas W. Diamond of the University of Chicago and Philip H. Dybvig of Washington University in St. Louis. The award is for “research on banks and financial crises.” The committee praised the winners for doing work “of great practical importance in regulating financial markets and dealing with financial crises.” Many monetary economists would disagree.
This is the opening paragraph of David R. Henderson, “An Economics Nobel for and by Central Bankers,” Wall Street Journal, October 10, 2022 (October 11 print edition.)
I rarely prefer an editor’s title to the one I choose, but this time I do. The editor clearly picked up on my closing paragraph:
The Nobel Prize in economics is funded not by the Nobel Foundation but by Sweden’s central bank. I don’t usually think that matters, but in this case I wonder if it does. The 2022 award seems to be an affirmation by central bankers of the value of central banking.
I’ll publish the whole thing on EconLog in 30 days.
I woke up at 2:45 a.m. PDT and turned on my computer to see who won. Once I learned, I knew right away that I knew enough to write the piece. (Sometimes I have to research for about an hour to make sure.) The main reason is that we covered all of these issues in detail in Jeff Hummel’s Masters course in Monetary Theory at San Jose State in early 2021. Larry White’s analysis of the Diamond/Dybvig model of “banking” was invaluable, and Jeff had walked us through it very carefully.