The New Deal and Recovery, Part 12: Fear Itself SHARE This great Nation will endure as it has endured, will revive and will prosper. …[T]he only thing we have to fear is fear itself. FDR, in his first inaugural address. There is no place for industry; because the fruit thereof is uncertain. Thomas Hobbes, on the state of nature, in
Leviathan.
Not the Sum of its Parts
So far, I ve tended to look at the New Deal as a set or sequence of distinct government policies and programs, remarking on how each either contributed to or hampered economic recovery. I ve also dealt only with those New Deal policies generally understood to have had promoting recovery as their aim.
Modeling the Legend, or, the Trouble with Diamond and Dybvig: Part I SHARE
Has any theoretical work on banking been more influential than Douglas Diamond and Phillip Dybvig s 1983 JPE article, Bank Runs, Deposit Insurance, and Liquidity ? If so, I can t think of it. With well over 12,000 Google citations and counting, it s certainly among the most cited academic papers in economics, let alone in the sub-discipline of monetary economics.
Nor has that paper s influence been merely academic. Far from it: it is routinely cited by policymakers as supplying a rationale for government intervention in banking, and for explicit national deposit insurance schemes in particular. That the number of countries that adopted such schemes more than quadrupled during the two decades immediately following the article s appearance from just 20 to 87 almost certainly owes something to Diamond and Dybvig s influential publication, which is bound to have informed the thinking of experts at the IM