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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 wi...

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 interve...