Best of #econtwitter - Nobel 2022 special edition

Throwback: 2021 Nobel special edition; and 2020 Nobel special edition

The prize

The Nobel Prize @NobelPrize

BREAKING NEWS: The Royal Swedish Academy of Sciences has decided to award the 2022 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Ben S. Bernanke, Douglas W. Diamond and Philip H. Dybvig “for research on banks and financial crises.” #NobelPrize

Threads

Brian Albrecht @BrianCAlbrecht

This year’s Nobel prize goes to Bernanke, Diamond, and Dybvig “for research on banks and financial crises.” What is their most famous work and what should you be reading to get up to speed? 🧵

Gabriel Chodorow-Reich @gchodorowreich

Huge congratulations to a much-deserved prize. Work by @benbernanke on the Great Depression was a major motivation to my own research. And I teach Diamond-Dybvig in intermediate macro every year. A short thread on the scientific citation.

Paul Krugman @paulkrugman

OK, some notes on the classic Diamond-Dybvig paper on bank runs, which exemplified the kind of economic analysis I've always loved: a (relatively) simple model that transforms your understanding, so that you'll never see things the same way again 1/

Jonathan Rose @thejonrose

The Nobel Prize announcement talks about the depiction of a bank run in It's a Wonderful Life. A classic movie, a classic reference. Great stuff. It all has to stop. nobelprize.org/uploads/2022/1…

^‘generalizing from fictional evidence’ is not always a fallacy, but it seems pedagogically unfortunate that the standard examples of “bank runs” are exclusively It’s a Wonderful Life and Mary Poppins

David Andolfatto @dandolfa

Alright, so now I see what all the fuss is about. Sorry @NobelPrize, this sketch is not an accurate description of DD83. Let me explain...

The Nobel Prize @NobelPrize

The work for which Ben Bernanke, Douglas Diamond and Philip Dybvig are being recognised has been crucial to subsequent research that has enhanced our understanding of banks, bank regulation, banking crises and how financial crises should be managed. #NobelPrize https://t.co/4drJwZ0yF9

George Selgin @GeorgeSelgin

Diamond and Dybvig's model has been extremely influential--itself a sufficient qualification for their reward. But IMHO, it has served more to perpetuate myths about, than to shed needed light upon, the causes of banking instability.

Brian Albrecht @BrianCAlbrecht

People, the authors included, often use this model to justify deposit insurance. That has gotten some pushback. For a clear explanation of the model and policy implications, I'd recommend @GeorgeSelgin's two pieces https://t.co/rKOAgsFnAL https://t.co/vGKWe8zvuz

Husnu C. Dalgic @HCD342

I teach Diamond and Dybivg (83) every year to my 1 st year PhD class. The beauty is that it is simple and offers a solution due to which we don’t see classical bank runs anymore, more on this 👇

More: Atif Mian, Stephen Williamson, the indispensable Marginal Revolution 1 / 2 / 3

Nobel Prize meta

Ben Golub 🇺🇦 @ben_golub

recalling a lovely thought of my friend @SNageebAli apropos of grumbles about whether some particular Nobel-winning work is "good": The role of a Nobel isn't to tell us what is good economics: we can think for ourselves. It's to recognize work that has shaped the field.

^as always, inclusion in the newsletter is not an endorsement

Memes

maia @maiamindel

When you win a Nobel Prize but are still an "et al"

Neoliberal 🌐🇺🇦 @ne0liberal

I've cracked open the vault of rare Bernanke memes on this glorious day

Matthew @AlampayDavis

A central bank giving a Nobel Prize to a central banker for central banking