Paul Robin Krugman is an American economist who is currently Distinguished Professor of Economics at the Graduate Center of the City University of New York, and a columnist for The New York Times.[1] In 2008, Krugman was awarded the Nobel Memorial Prize in Economic Sciences for his contributions to New Trade Theory and New Economic Geography.[2] The Prize Committee cited Krugman's work explaining the patterns of international trade and the geographic distribution of economic activity, by examining the effects of economies of scale and of consumer preferences for diverse goods and services.[3]

Krugman was previously a professor of economics at MIT, and later at Princeton University. He retired from Princeton in June 2015, and holds the title of professor emeritus there. He also holds the title of Centenary Professor at the London School of Economics.[4] Krugman was President of the Eastern Economic Association in 2010, and is among the most influential economists in the world.[5] Krugman is known in academia for his work on international economics (including trade theory, economic geography, and international finance),[6][7] liquidity traps, and currency crisis.

Krugman has written over 20 books, including scholarly works, textbooks, and books for a more general audience, and has published over 200 scholarly articles in professional journals and edited volumes.[8] He has also written several hundred columns on economic and political issues for The New York Times, Fortune and Slate. A 2011 survey of economics professors named him their favorite living economist under the age of 60.[9] As a commentator, Krugman has written on a wide range of economic issues including income distribution, taxation, macroeconomics, and international economics. Krugman considers himself a modern liberal, referring to his books, his blog on The New York Times, and his 2007 book The Conscience of a Liberal.[10] His popular commentary has attracted widespread attention and comments, both positive and negative.[11]

Early life and educationEdit

Krugman was born to a Jewish family,[12] the son of Anita and David Krugman (1924–2013). In 1922, his paternal grandparents immigrated to the United States from Brest, Belarus, at that time a part of Poland.[13] He was born in Albany, New York, and grew up in Merrick, a hamlet in Nassau County.[14] He graduated from John F. Kennedy High School in Bellmore.[15] According to Krugman, his interest in economics began with Isaac Asimov's Foundation novels, in which the social scientists of the future use a new science of "psychohistory" to try to save civilization. Since present-day science fell far short of "psychohistory", Krugman turned to economics as the next best thing.[16][17]

Krugman earned his B.A. summa cum laude in economics from Yale University in 1974, and went on to pursue a PhD in economics from Massachusetts Institute of Technology (MIT). In 1977, he successfully completed his PhD in three years, with a thesis titled Essays on flexible exchange rates. While at MIT, he was part of a small group of MIT students sent to work for the Central Bank of Portugal for three months in the summer of 1976, during the chaotic aftermath of the Carnation Revolution.[18]

Krugman later praised his PhD thesis advisor, Rudi Dornbusch, as "one of the great economics teachers of all time" and said that he "had the knack of inspiring students to pick up his enthusiasm and technique, but find their own paths".[19] In 1978, Krugman presented a number of ideas to Dornbusch, who flagged as interesting the idea of a monopolistically competitive trade model. Encouraged, Krugman worked on it and later wrote, "[I] knew within a few hours that I had the key to my whole career in hand".[18] In that same year, Krugman wrote "The Theory of Interstellar Trade", a tongue-in-cheek essay on computing interest rates on goods in transit near the speed of light. He says he wrote it to cheer himself up when he was "an oppressed assistant professor".[20]

Academic career Edit

File:Paul Krugman at the German National Library in Frankfurt.jpg

Krugman became an assistant professor at Yale University in September 1977. He joined the faculty of MIT in 1979. From 1982 to 1983, Krugman spent a year working at the Reagan White House as a staff member of the Council of Economic Advisers. He rejoined MIT as a full professor in 1984. Krugman has also taught at Stanford, Yale, and the London School of Economics.[21]

In 2000, Krugman joined Princeton University as Professor of Economics and International Affairs. He is also currently Centenary Professor at the London School of Economics, and a member of the Group of Thirty international economic body.[1] He has been a research associate at the National Bureau of Economic Research since 1979.[22] Krugman was President of the Eastern Economic Association in 2010.[23] In February 2014, he announced that he would be retiring from Princeton in June 2015 and that he would be joining the faculty at the Graduate Center of the City University of New York.[24]

Paul Krugman has written extensively on international economics, including international trade, economic geography, and international finance. The Research Papers in Economics project ranks him among the world's most influential economists.[5] Krugman's International Economics: Theory and Policy, co-authored with Maurice Obstfeld, is a standard undergraduate textbook on international economics.[25] He is also co-author, with Robin Wells, of an undergraduate economics text which he says was strongly inspired by the first edition of Paul Samuelson's classic textbook.[26] Krugman also writes on economic topics for the general public, sometimes on international economic topics but also on income distribution and public policy.

The Nobel Prize Committee stated that Krugman's main contribution is his analysis of the effects of economies of scale, combined with the assumption that consumers appreciate diversity, on international trade and on the location of economic activity.[3] The importance of spatial issues in economics has been enhanced by Krugman's ability to popularize this complicated theory with the help of easy-to-read books and state-of-the-art syntheses. "Krugman was beyond doubt the key player in 'placing geographical analysis squarely in the economic mainstream' ... and in conferring it the central role it now assumes."[27]

New trade theory Edit

Prior to Krugman's work, trade theory (see David Ricardo and Heckscher–Ohlin model) emphasized trade based on the comparative advantage of countries with very different characteristics, such as a country with a high agricultural productivity trading agricultural products for industrial products from a country with a high industrial productivity. However, in the 20th century, an ever-larger share of trade occurred between countries with similar characteristics, which is difficult to explain by comparative advantage. Krugman's explanation of trade between similar countries was proposed in a 1979 paper in the Journal of International Economics, and involves two key assumptions: that consumers prefer a diverse choice of brands, and that production favors economies of scale.[28] Consumers' preference for diversity explains the survival of different versions of cars like Volvo and BMW. However, because of economies of scale, it is not profitable to spread the production of Volvos all over the world; instead, it is concentrated in a few factories and therefore in a few countries (or maybe just one). This logic explains how each country may specialize in producing a few brands of any given type of product, instead of specializing in different types of products.

File:Distribution of Manufacturing between Two Regions.png

Krugman modeled a 'preference for diversity' by assuming a CES utility function like that in a 1977 paper by Avinash Dixit and Joseph Stiglitz.[29][30] Many models of international trade now follow Krugman's lead, incorporating economies of scale in production and a preference for diversity in consumption.[3][31] This way of modeling trade has come to be called New Trade Theory.[27]

Krugman's theory also took into account transportation costs, a key feature in producing the "home market effect", which would later feature in his work on the new economic geography. The home market effect "states that, ceteris paribus, the country with the larger demand for a good shall, at equilibrium, produce a more than proportionate share of that good and be a net exporter of it."[27] The home market effect was an unexpected result, and Krugman initially questioned it, but ultimately concluded that the mathematics of the model were correct.[27]

When there are economies of scale in production, it is possible that countries may become 'locked into' disadvantageous patterns of trade.[32] Krugman points out that although globalization has been positive on a whole, since the 1980s the process known as hyper-globalization has at least played a part in rising inequality.[33] Nonetheless, trade remains beneficial in general, even between similar countries, because it permits firms to save on costs by producing at a larger, more efficient scale, and because it increases the range of brands available and sharpens the competition between firms.[34] Krugman has usually been supportive of free trade and globalization.[35][36] He has also been critical of industrial policy, which New Trade Theory suggests might offer nations rent-seeking advantages if "strategic industries" can be identified, saying it's not clear that such identification can be done accurately enough to matter.[37]

New economic geography Edit

It took an interval of eleven years, but ultimately Krugman's work on New Trade Theory (NTT) converged to what is usually called the "new economic geography" (NEG), which Krugman began to develop in a seminal 1991 paper, "Increasing Returns and Economic Geography", published in the Journal of Political Economy.[38] In Krugman's own words, the passage from NTT to NEG was "obvious in retrospect; but it certainly took me a while to see it. ... The only good news was that nobody else picked up that $100 bill lying on the sidewalk in the interim."[39] This would become Krugman's most-cited academic paper: by early 2009, it had 857 citations, more than double his second-ranked paper.[27] Krugman called the paper "the love of my life in academic work."[40]

The "home market effect" that Krugman discovered in NTT also features in NEG, which interprets agglomeration "as the outcome of the interaction of increasing returns, trade costs and factor price differences."[27] If trade is largely shaped by economies of scale, as Krugman's trade theory argues, then those economic regions with most production will be more profitable and will therefore attract even more production. That is, NTT implies that instead of spreading out evenly around the world, production will tend to concentrate in a few countries, regions, or cities, which will become densely populated but will also have higher levels of income.[3][7]

International finance Edit

Krugman has also been influential in the field of international finance. As a graduate student, Krugman visited the Federal Reserve Board, where Stephen Salant and Dale Henderson were completing their discussion paper on speculative attacks in the gold market. Krugman adapted their model for the foreign exchange market, resulting in a 1979 paper on currency crises in the Journal of Money, Credit, and Banking, which showed that misaligned fixed exchange rate regimes are unlikely to end smoothly: instead, they end in a sudden speculative attack.[41] Krugman's paper is considered one of the main contributions to the 'first generation' of currency crisis models,[42][43] and it is his second-most-cited paper (457 citations as of early 2009).[27]

In response to the global financial crisis of 2008, Krugman proposed, in an informal "mimeo" style of publication,[44] an "international finance multiplier", to help explain the unexpected speed with which the global crisis had occurred. He argued that when, "highly leveraged financial institutions [HLIs], which do a lot of cross-border investment [....] lose heavily in one market [...] they find themselves undercapitalized, and have to sell off assets across the board. This drives down prices, putting pressure on the balance sheets of other HLIs, and so on." Such a rapid contagion had hitherto been considered unlikely because of "decoupling" in a globalized economy.[45][46][47] He first announced that he was working on such a model on his blog, on October 5, 2008.[48] Within days of its appearance, it was being discussed on some popular economics-oriented blogs.[49][50] The note was soon being cited in papers (draft and published) by other economists,[51] even though it had not itself been through ordinary peer review processes.

Macroeconomics and fiscal policy Edit

Krugman has done much to revive discussion of the liquidity trap as a topic in economics.[52][53][54][55] He recommended pursuing aggressive fiscal policy and unconventional monetary policy to counter Japan's lost decade in the 1990s, arguing that the country was mired in a Keynesian liquidity trap.[56][57][58] The debate he started at that time over liquidity traps and what policies best address them continues in the economics literature.[59]

Krugman had argued in The Return of Depression Economics that Japan was in a liquidity trap in the late 1990s, since the central bank could not drop interest rates any lower to escape economic stagnation.[60] The core of Krugman's policy proposal for addressing Japan's liquidity trap was inflation targeting, which, he argued "most nearly approaches the usual goal of modern stabilization policy, which is to provide adequate demand in a clean, unobtrusive way that does not distort the allocation of resources."[58] The proposal appeared first in a web posting on his academic site.[61] This mimeo-draft was soon cited, but was also misread by some as repeating his earlier advice that Japan's best hope was in "turning on the printing presses", as recommended by Milton Friedman, John Makin, and others.[62][63][64]

Krugman has since drawn parallels between Japan's 'lost decade' and the late 2000s recession, arguing that expansionary fiscal policy is necessary as the major industrialized economies are mired in a liquidity trap.[65] In response to economists who point out that the Japanese economy recovered despite not pursuing his policy prescriptions, Krugman maintains that it was an export-led boom that pulled Japan out of its economic slump in the late-90s, rather than reforms of the financial system.[66]

Krugman was one of the most prominent advocates of the 2008–2009 Keynesian resurgence, so much so that economics commentator Noah Smith referred to it as the "Krugman insurgency."[67][68][69] His view that most peer-reviewed macroeconomic research since the mid-1960s is wrong, preferring simpler models developed in the 1930s, has been criticized by some modern economists, like John H. Cochrane.[70] In June 2012, Krugman and Richard Layard launched A manifesto for economic sense, where they call for greater use of fiscal stimulus policy to reduce unemployment and foster growth.[71] The manifesto received over four thousand signatures within two days of its launch,[72] and has attracted both positive and critical responses.[73][74]

File:President George W. Bush poses for a photo with Nobel Prize winners Monday, Nov. 24, 2008.jpg

Nobel Memorial Prize in Economic Sciences Edit

Template:Wikinews Krugman was awarded the Nobel Memorial Prize in Economic Sciences (informally the Nobel Prize in Economics), the sole recipient for 2008. This prize includes an award of about $1.4 million and was given to Krugman for his work associated with New Trade Theory and the New Economic Geography.[75] In the words of the prize committee, "By having integrated economies of scale into explicit general equilibrium models, Paul Krugman has deepened our understanding of the determinants of trade and the location of economic activity."[76]

Awards Edit

A May 2011 Hamilton College analysis of 26 politicians, journalists, and media commentators who made predictions in major newspaper columns or television news shows from September 2007 to December 2008 found that Krugman was the most accurate. Only nine of the prognosticators predicted more accurately than chance, two were significantly less accurate, and the remaining 14 were no better or worse than a coin flip. Krugman was correct in 15 out of 17 predictions, compared to 9 out of 11 for the next most accurate media figure, Maureen Dowd.[91]

Foreign Policy named Krugman one of its 2012 FP Top 100 Global Thinkers "for wielding his acid pen against austerity".[92]

Author Edit

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In the 1990s, besides academic books and textbooks, Krugman increasingly began writing books for a general audience on issues he considered important for public policy. In The Age of Diminished Expectations (1990), he wrote in particular about the increasing US income inequality in the "New Economy" of the 1990s. He attributes the rise in income inequality in part to changes in technology, but principally to a change in political atmosphere which he attributes to Movement Conservatives.

In September 2003, Krugman published a collection of his columns under the title, The Great Unraveling, about the Bush administration's economic and foreign policies and the US economy in the early 2000s. His columns argued that the large deficits during that time were generated by the Bush administration as a result of decreasing taxes on the rich, increasing public spending, and fighting the Iraq war. Krugman wrote that these policies were unsustainable in the long run and would eventually generate a major economic crisis. The book was a best-seller.[78][93][94]

In 2007, Krugman published The Conscience of a Liberal, whose title refers to Barry Goldwater's Conscience of a Conservative.[95] It details the history of wealth and income gaps in the United States in the 20th century. The book describes how the gap between rich and poor declined greatly in middle of the century, and then widened in the last two decades to levels higher even than in the 1920s. In Conscience, Krugman argues that government policies played a much greater role than commonly thought both in reducing inequality in the 1930s through 1970s and in increasing it in the 1980s through the present, and criticizes the Bush administration for implementing policies that Krugman believes widened the gap between the rich and poor.

Krugman also argued that Republicans owed their electoral successes to their ability to exploit the race issue to win political dominance of the South.[96][97] Krugman argues that Ronald Reagan had used the "Southern Strategy" to signal sympathy for racism without saying anything overtly racist,[98] citing as an example Reagan's coining of the term "welfare queen".[99]

In his book, Krugman proposed a "new New Deal", which included placing more emphasis on social and medical programs and less on national defense.[100] In his review of Conscience of a Liberal, the liberal journalist and author Michael Tomasky credited Krugman with a commitment "to accurate history even when some fudging might be in order for the sake of political expediency."[96] In a review for The New York Times, Pulitzer prize-winning historian David M. Kennedy stated, "Like the rants of Rush Limbaugh or the films of Michael Moore, Krugman's shrill polemic may hearten the faithful, but it will do little to persuade the unconvinced".[101]

In late 2008, Krugman published a substantial updating of an earlier work, entitled The Return of Depression Economics and the Crisis of 2008. In the book, he discusses the failure of the United States regulatory system to keep pace with a financial system increasingly out-of-control, and the causes of and possible ways to contain the greatest financial crisis since the 1930s. In 2012, Krugman published End This Depression Now!, a book which argues that looking at the available historical economic data, fiscal cuts and austerity measures only deprive the economy of valuable funds that can circulate and further add to a poor economy – people cannot spend, and markets cannot thrive if there is not enough consumption and there cannot be sufficient consumption if there is large unemployment. He argues that while it is necessary to cut debt, it is the worst time to do so in an economy that has just suffered the most severe of financial shocks, and must be done instead when an economy is near full-employment when the private sector can withstand the burden of decreased government spending and austerity. Failure to stimulate the economy either by public or private sectors will only unnecessarily lengthen the current economic depression and make it worse.[102]

Commentator Edit

Martin Wolf has written that Krugman is both the "most hated and most admired columnist in the US".[103] Economist J. Peter Neary has noted that Krugman "has written on a wide range of topics, always combining one of the best prose styles in the profession with an ability to construct elegant, insightful and useful models."[104] Neary added that "no discussion of his work could fail to mention his transition from Academic Superstar to Public Intellectual. Through his extensive writings, including a regular column for The New York Times, monographs and textbooks at every level, and books on economics and current affairs for the general public ... he has probably done more than any other writer to explain economic principles to a wide audience."[104] Krugman has been described as the most controversial economist in his generation[105][106] and according to Michael Tomasky since 1992 he has moved "from being a center-left scholar to being a liberal polemicist."[96]

From the mid-1990s onwards, Krugman wrote for Fortune (1997–99)[22] and Slate (1996–99),[22] and then for The Harvard Business Review, Foreign Policy, The Economist, Harper's, and Washington Monthly. In this period Krugman critiqued various positions commonly taken on economic issues from across the political spectrum, from protectionism and opposition to the World Trade Organization on the left to supply side economics on the right.[107]

During the 1992 presidential campaign, Krugman praised Bill Clinton's economic plan in The New York Times, and Clinton's campaign used some of Krugman's work on income inequality. At the time, it was considered likely that Clinton would offer him a position in the new administration, but allegedly Krugman's volatility and outspokenness caused Clinton to look elsewhere.[105] Krugman later said that he was "temperamentally unsuited for that kind of role. You have to be very good at people skills, biting your tongue when people say silly things."[107][108] In a Fresh Dialogues interview, Krugman added, "you have to be reasonably organized... I can move into a pristine office and within three days it will look like a grenade went off."[109]

In 1999, near the height of the dot com boom, The New York Times approached Krugman to write a bi-weekly column on "the vagaries of business and economics in an age of prosperity."[107] His first columns in 2000 addressed business and economic issues, but as the 2000 US presidential campaign progressed, Krugman increasingly focused on George W. Bush's policy proposals. According to Krugman, this was partly due to "the silence of the media – those 'liberal media' conservatives complain about..."[107] Krugman accused Bush of repeatedly misrepresenting his proposals, and criticized the proposals themselves.[107] After Bush's election, and his perseverance with his proposed tax cut in the midst of the slump (which Krugman argued would do little to help the economy but substantially raise the fiscal deficit), Krugman's columns grew angrier and more focused on the administration. As Alan Blinder put it in 2002, "There's been a kind of missionary quality to his writing since then ... He's trying to stop something now, using the power of the pen."[107] Partly as a result, Krugman's twice-weekly column on the Op-Ed page of The New York Times has made him, according to Nicholas Confessore, "the most important political columnist in America... he is almost alone in analyzing the most important story in politics in recent years – the seamless melding of corporate, class, and political party interests at which the Bush administration excels."[107] In an interview in late 2009, Krugman said his missionary zeal had changed in the post-Bush era and he described the Obama administration as "good guys but not as forceful as I'd like...When I argue with them in my column this is a serious discussion. We really are in effect speaking across the transom here."[110] Krugman says he's more effective at driving change outside the administration than inside it, "now, I'm trying to make this progressive moment in American history a success. So that's where I'm pushing."[110]

Krugman's columns have drawn criticism as well as praise. A 2003 article in The Economist[111] questioned Krugman's "growing tendency to attribute all the world's ills to George Bush," citing critics who felt that "his relentless partisanship is getting in the way of his argument" and claiming errors of economic and political reasoning in his columns.[78] Daniel Okrent, a former The New York Times ombudsman, in his farewell column, criticized Krugman for what he said was "the disturbing habit of shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes but leaves him open to substantive assaults."[112][113]

Krugman's New York Times blog is "The Conscience of a Liberal," devoted largely to economics and politics.

Five days after 9/11 terrorist attacks, Krugman argued in his column that calamity was "partly self-inflicted" due to transfer of responsibility for airport security from government to airlines. His column provoked an angry response and The New York Times was flooded with complaints. According to Larissa MacFarquhar of The New Yorker, while some peopleTemplate:Who thought that he was too partisan to be a columnist for The New York Times, he was revered on the left.[114][115] Similarly, on the 10th anniversary of the 9/11 on the United States Krugman again provoked a controversy by accusing on his New York Times blog former U.S. President George W. Bush and former New York City mayor Rudy Giuliani of rushing "to cash in on the horror" after the attacks and describing the anniversary as "an occasion for shame".[116][117]

Krugman was noteworthy for his fierce opposition to the 2016 presidential campaign of Bernie Sanders. On January 19th, 2016 he wrote an article which criticized Bernie Sanders for his perceived lack of political realism, compared Sanders' plans for healthcare and financial reform unfavorably to those of Hillary Clinton, and cited criticisms of Sanders from other liberal policy wonks like Mike Konczal and Ezra Klein. [118] Later, Krugman wrote an article which accused Sanders of "[going] for easy slogans over hard thinking" and attacking Hillary Clinton in a way that was "just plain dishonest." [119]

Krugman has expressed reservations regarding the Trump administration.[120]

East Asian growth Edit

In a 1994 Foreign Affairs article, Paul Krugman argued that it was a myth that the economic successes of the East Asian 'tigers' constituted an economic miracle. He argued that their rise was fueled by mobilizing resources and that their growth rates would inevitably slow.[121] His article helped popularize the argument made by Lawrence Lau and Alwyn Young, among others, that the growth of economies in East Asia was not the result of new and original economic models, but rather from high capital investment and increasing labor force participation, and that total factor productivity had not increased. Krugman argued that in the long term, only increasing total factor productivity can lead to sustained economic growth. Krugman's article was highly criticized in many Asian countries when it first appeared, and subsequent studies disputed some of Krugman's conclusions. However, it also stimulated a great deal of research, and may have caused the Singapore government to provide incentives for technological progress.[122]

During the 1997 Asian financial crisis, Krugman advocated currency controls as a way to mitigate the crisis. Writing in a Fortune magazine article, he suggested exchange controls as "a solution so unfashionable, so stigmatized, that hardly anyone has dared suggest it."[123] Malaysia was the only country that adopted such controls, and although the Malaysian government credited its rapid economic recovery on currency controls, the relationship is disputed.[124] An empirical study found that the Malaysian policies produced faster economic recovery and smaller declines in employment and real wages.[125] Krugman later stated that the controls might not have been necessary at the time they were applied, but that nevertheless "Malaysia has proved a point – namely, that controlling capital in a crisis is at least feasible."[126] Krugman more recently pointed out that emergency capital controls have even been endorsed by the IMF, and are no longer considered radical policy.[127][128][129]

U.S. economic policies Edit

In the early 2000s, Krugman repeatedly criticized the Bush tax cuts, both before and after they were enacted. Krugman argued that the tax cuts enlarged the budget deficit without improving the economy, and that they enriched the wealthy – worsening income distribution in the US.[94][130][131][132][133] Krugman advocated lower interest rates (to promote investment and spending on housing and other durable goods), and increased government spending on infrastructure, military, and unemployment benefits, arguing that these policies would have a larger stimulus effect, and unlike permanent tax cuts, would only temporarily increase the budget deficit.[133][134] In addition, he was against Bush's proposal to privatize social security.[135]

In August 2005, after Alan Greenspan expressed concern over housing markets, Krugman criticized Greenspan's earlier reluctance to regulate the mortgage and related financial markets, arguing that "[he's] like a man who suggests leaving the barn door ajar, and then – after the horse is gone – delivers a lecture on the importance of keeping your animals properly locked up."[136] Krugman has repeatedly expressed his view that Greenspan and Phil Gramm are the two individuals most responsible for causing the subprime crisis. Krugman points to Greenspan and Gramm for the key roles they played in keeping derivatives, financial markets, and investment banks unregulated, and to the Gramm-Leach-Bliley Act, which repealed Great Depression era safeguards that prevented commercial banks, investment banks and insurance companies from merging.[137][138][139][140]

Krugman has also been critical of some of the Obama administration's economic policies. He has criticized the Obama stimulus plan as being too small and inadequate given the size of the economy and the banking rescue plan as misdirected; Krugman wrote in The New York Times: "an overwhelming majority [of the American public] believes that the government is spending too much to help large financial institutions. This suggests that the administration's money-for-nothing financial policy will eventually deplete its political capital."[141] In particular, he considered the Obama administration's actions to prop up the US financial system in 2009 to be impractical and unduly favorable to Wall Street bankers.[113] In anticipation of President Obama's Job Summit in December 2009, Krugman said in a Fresh Dialogues interview, "This jobs summit can't be an empty exercise...he can't come out with a proposal for $10 or $20 Billion of stuff because people will view that as a joke. There has to be a significant job proposal...I have in mind something like $300 Billion."[142]

Krugman has recently criticized China's exchange rate policy, which he believes to be a significant drag on global economic recovery from the Late-2000s recession, and he has advocated a "surcharge" on Chinese imports to the US in response.[143] Jeremy Warner of The Daily Telegraph accused Krugman of advocating a return to self-destructive protectionism.[144]

In April 2010, as the Senate began considering new financial regulations, Krugman argued that the regulations should not only regulate financial innovation, but also tax financial-industry profits and remuneration. He cited a paper by Andrei Shleifer and Robert Vishny released the previous week, which concludes that most innovation was in fact about "providing investors with false substitutes for [traditional] assets like bank deposits," and once investors realize the sheer number of securities that are unsafe a "flight to safety" occurs which necessarily leads to "financial fragility."[145][146]

In his June 28, 2010 column in The New York Times, in light of the recent G-20 Toronto Summit, Krugman criticized world leaders for agreeing to halve deficits by 2013. Krugman claimed that these efforts could lead the global economy into the early stages of a "third depression" and leave "millions of lives blighted by the absence of jobs." He advocated instead the continued stimulus of economies to foster greater growth.[147]

In a 2014 review of Thomas Piketty's Capital in the Twenty-First Century he stated we are in a Second Gilded Age.[148]

Economic views Edit

Krugman identifies as a Keynesian[149][150] and a saltwater economist,[151] and he has criticized the freshwater school on macroeconomics.[152][153] Although he has used New Keynesian theory in his work, he has also criticized it for lacking predictive power and for hewing to ideas like the efficient-market hypothesis and rational expectations.[153] Since the 1990s, he has promoted the practical use of the IS-LM model of the neoclassical synthesis, pointing out its relative simplicity compared to New Keynesian models, and its continued currency in economic policy analysis.[154][155][156]

In the wake of the 2007–2009 financial crisis he has remarked that he is "gravitating towards a Keynes-Fisher-Minsky view of macroeconomics."[157] Post-Keynesian observers cite commonalities between Krugman's views and those of the Post-Keynesian school.[158][159][160] In recent academic work, he has collaborated with Gauti Eggertsson on a New Keynesian model of debt-overhang and debt-driven slumps, inspired by the writings of Irving Fisher, Hyman Minsky, and Richard Koo. Their work argues that during a debt-driven slump, the "paradox of toil", together with the paradox of flexibility, can exacerbate a liquidity trap, reducing demand and employment.[161]

Free trade Edit

Krugman's support for free trade in the 1980s–1990s provoked some ire from the anti-globalization movement.[162][163][164]

In 1987 he quipped that, "If there were an Economist's Creed, it would surely contain the affirmations 'I understand the Principle of Comparative Advantage' and 'I advocate Free Trade'."[165][166] In the same article, Krugman argues that, given the findings of New Trade Theory, "[free trade] has shifted from optimum to reasonable rule of can never again be asserted as the policy that economic theory tells us is always right." However, Krugman generally favored free trade given the enormous political costs of actively engaging in strategic trade policy and because there is no clear method for a government to discover which industries will ultimately yield positive returns. He also noted that increasing returns and strategic trade theory do not disprove the underlying truth behind comparative advantage.

More recently, in 2015, Krugman noted that for future trade agreements, "whatever you may say about the benefits of free trade, most of those benefits have already been realized."[167]

Political views Edit

Krugman describes himself as liberal, and has explained that he views the term "liberal" in the American context to mean "more or less what social democratic means in Europe."[95] In a 2009 Newsweek article, Evan Thomas described Krugman as having "all the credentials of a ranking member of the East coast liberal establishment" but also as someone who is anti-establishment, a "scourge of the Bush administration", and a critic of the Obama administration.[113] In 1996, NewsweekTemplate:'s Michael Hirsh remarked, "Say this for Krugman: though an unabashed liberal ... he's ideologically colorblind. He savages the supply-siders of the Reagan-Bush era with the same glee as he does the 'strategic traders' of the Clinton administration."[105]

Krugman has at times advocated free markets in contexts where they are often viewed as controversial. He has written against rent control and land-use restrictions in favor of market supply and demand,[168][169] likened the opposition against free trade and globalization to the opposition against evolution via natural selection (1996),[163] opposed farm subsidies,[170] argued that sweatshops are preferable to unemployment,[35] dismissed the case for living wages (1998),[171] and argued against mandates, subsidies, and tax breaks for ethanol (2000).[172] In 2003, he questioned the usefulness of NASA's manned space flights given the available technology and their high financial cost compared to their general benefits.[173] Krugman has also criticized U.S. zoning laws[174] and European labor market regulation.[175][176] He calls current Israeli policy "narrow-minded" and "basically a gradual, long-run form of national suicide", saying that it's "bad for Jews everywhere, not to mention the world".[177]

U.S. race relations Edit

Krugman has criticized the Republican Party leadership for what he sees as a strategic (but largely tacit) reliance on racial divisions.[178][179][180] In his Conscience of a Liberal, he wrote


On working in the Reagan administration Edit

Krugman worked for Martin Feldstein when the latter was appointed chairman of the Council of Economic Advisers and chief economic advisor to President Ronald Reagan. He later wrote in an autobiographical essay, "It was, in a way, strange for me to be part of the Reagan Administration. I was then and still am an unabashed defender of the welfare state, which I regard as the most decent social arrangement yet devised."[18] Krugman found the time "thrilling, then disillusioning". He did not fit into the Washington political environment, and was not tempted to stay on.[18]

On Gordon Brown vs David Cameron Edit

According to Krugman, Gordon Brown and his party were unfairly blamed for the late-2000s financial crisis.[181] He has also praised the former British Prime Minister, whom he described as "more impressive than any US politician" after a three-hour conversation with him.[182] Krugman asserted that Brown "defined the character of the worldwide financial rescue effort" and urged British voters not to support the opposition Conservative Party in the 2010 General Election, arguing their Party Leader David Cameron "has had little to offer other than to raise the red flag of fiscal panic."[183][184]

Personal life Edit

Krugman has been married twice. His first wife, Robin L. Bergman, is a designer. He is currently married to Robin Wells, an academic economist who has collaborated with Krugman on textbooks.[185][186][187] Krugman reports that he is a distant relative of conservative journalist David Frum.[188] He has described himself as a "Loner. Ordinarily shy. Shy with individuals."[189] He lives in New York City.[190]

Krugman retired from Princeton University in June 2015 to become a professor at the Graduate Center of the City University of New York and a distinguished scholar at the Graduate Center's Luxembourg Income Study Center.[191][192]

Published works Edit

Academic books (authored or coauthored) Edit

  • The Spatial Economy – Cities, Regions and International Trade (July 1999), with Masahisa Fujita and Anthony Venables. MIT Press, Template:ISBN
  • The Self Organizing Economy (February 1996), Template:ISBN
  • EMU and the Regions (December 1995), with Guillermo de la Dehesa. Template:ISBN
  • Development, Geography, and Economic Theory (Ohlin Lectures) (September 1995), Template:ISBN
  • Foreign Direct Investment in the United States (3rd Edition) (February 1995), with Edward M. Graham. Template:ISBN
  • World Savings Shortage (September 1994), Template:ISBN
  • What Do We Need to Know About the International Monetary System? (Essays in International Finance, No 190 July 1993) Template:ISBN
  • Currencies and Crises (June 1992), Template:ISBN
  • Geography and Trade (Gaston Eyskens Lecture Series) (August 1991), Template:ISBN
  • The Risks Facing the World Economy (July 1991), with Guillermo de la Dehesa and Charles Taylor. Template:ISBN
  • Has the Adjustment Process Worked? (Policy Analyses in International Economics, 34) (June 1991), Template:ISBN
  • Rethinking International Trade (April 1990), Template:ISBN
  • Trade Policy and Market Structure (March 1989), with Elhanan Helpman. Template:ISBN
  • Exchange-Rate Instability (Lionel Robbins Lectures) (November 1988), Template:ISBN
  • Adjustment in the World Economy (August 1987) Template:ISBN
  • Market Structure and Foreign Trade: Increasing Returns, Imperfect Competition, and the International Economy (May 1985), with Elhanan Helpman. Template:ISBN

Academic books (edited or coedited) Edit

  • Currency Crises (National Bureau of Economic Research Conference Report) (September 2000), Template:ISBN
  • Trade with Japan: Has the Door Opened Wider? (National Bureau of Economic Research Project Report) (March 1995), Template:ISBN
  • Empirical Studies of Strategic Trade Policy (National Bureau of Economic Research Project Report) (April 1994), co-edited with Alasdair Smith. Template:ISBN
  • Exchange Rate Targets and Currency Bands (October 1991), co-edited with Marcus Miller. Template:ISBN
  • Strategic Trade Policy and the New International Economics (January 1986), Template:ISBN

Economics textbooks Edit

  • Economics: European Edition (Spring 2007), with Robin Wells and Kathryn Graddy. Template:ISBN
  • Macroeconomics (February 2006), with Robin Wells. Template:ISBN
  • Economics, first edition (December 2005), with Robin Wells. Template:ISBN
  • Economics, second edition (2009), with Robin Wells. Template:ISBN
  • Economics, third edition (2013), with Robin Wells. Template:ISBN
  • Microeconomics (March 2004), with Robin Wells. Template:ISBN
  • International Economics: Theory and Policy, with Maurice Obstfeld. 7th Edition (2006), Template:ISBN; 1st Edition (1998), Template:ISBN

Books for a general audience Edit

Selected academic articles Edit

See also Edit


Further reading Edit

References Edit

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  3. 3.0 3.1 3.2 3.3 Nobel Prize Committee, "The Prize in Economic Sciences 2008"
  4. London School of Economics, Centre for Economic Performance, Lionel Robbins Memorial Lectures 2009: The Return of Depression Economics. Retrieved August 19, 2009.
  5. 5.0 5.1 Template:Cite web
  6. Note: Krugman modeled a 'preference for diversity' by assuming a CES utility function like that in A. Dixit and J. Stiglitz (1977), 'Monopolistic competition and optimal product diversity', American Economic Review 67.
  7. 7.0 7.1 Forbes, October 13, 2008, "Paul Krugman, Nobel"
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  10. The New York Times, "The Conscience of a Liberal." Retrieved August 6, 2009
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  15. Associated Press, "Paul Krugman, LI Native, wins Nobel in economics",Newsday, October 14, 2008
  16. Interview, U.S. Economist Krugman Wins Nobel Prize in Economics "PBS, Jim Lehrer News Hour", October 13, 2008, transcript Retrieved October 14, 2008
  17. The New York Times, August 6, 2009, "Up Front: Paul Krugman"
  18. 18.0 18.1 18.2 18.3 Incidents From My Career, by Paul Krugman, Princeton University Press, Retrieved December 10, 2008
  19. Paul Krugman, 2002, Rudi Dornbusch
  20. Paul Krugman, March 11, 2008, The New York Times blog, "Economics: the final frontier"
  21. Krugman Curriculum Vitae
  22. 22.0 22.1 22.2 22.3 Princeton Weekly Bulletin, October 20, 2008, "Biography of Paul Krugman", 98(7)
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  34. "Bold strokes: a strong economic stylist wins the Nobel", The Economist, October 16, 2008.
  35. 35.0 35.1 In Praise of Cheap Labor by Paul Krugman, Slate, March 21, 1997
  36. (He writes on p. xxvi of his book The Great Unraveling that "I still have the angry letter Ralph Nader sent me when I criticized his attacks on globalization.")
  37. Strategic trade policy and the new international economics, Paul R. Krugman (ed), The MIT Press, p. 18, Template:ISBN
  38. "Honoring Paul Krugman" Economix blog of The New York Times, Edward Glaeser, October 13, 2008.
  39. Krugman (1999) "Was it all in Ohlin?"
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  43. Craig Burnside, Martin Eichenbaum, and Sergio Rebelo (2008), "Currency crisis models", New Palgrave Dictionary of Economics, 2nd ed.
  44. "The International Finance Multiplier", P. Krugman, October 2008
  45. "Global Economic Integration and Decoupling", Donald L. Kohn, speech at the International Research Forum on Monetary policy, Frankfurt, Germany, 06-26-2008; from website for the Board of Governors for the Federal Reserve System. Retrieved 08-20-2009, June 26, 2008
  46. Nayan Chanda, YaleGlobal Online, orig. from Businessworld February 8, 2008 "Decoupling Demystified"
  47. "The myth of decoupling," Sebastien Walti, February 2009
  48. "The International Finance Multiplier", The Conscience of a Liberal (blog), 10-05-2008. Retrieved 09-20-2009
  49. Andrew Leonard, "Krugman: 'We are all Brazilians now'", "How the World Works", 10-07-2008
  50. "Krugman: The International Finance Multiplier", Mark Thoma, Economist's View, 10-06-2008, [2]
  51. "The geography of finance: after the storm", R O'Brien, A Keith, Cambridge Journal of Regions, Economy and Society, June 2009 2(2):245-265 Template:Doi [3]
  52. Japanese fixed income markets: money, bond and interest rate derivatives, Jonathan Batten, Thomas A. Fetherston, Peter G. Szilagyi (eds.) Elsevier Science, November 30, 2006, Template:ISBN p. 137
  53. Ben Bernanke, "Japanese Monetary Policy: a case of self-induced paralysis?", in Japan's financial crisis and its parallels to U.S. experience, Ryōichi Mikitani, Adam Posen (ed), Institute for International Economics, October 2000 Template:ISBN p. 157
  54. "Some Observations on the Return of the Liquidity Trap", Scott Sumner, Cato Journal, Vol. 21, No. 3 (Winter 2002).
  55. Reconstructing Macroeconomics: Structuralist Proposals and Critiques of the Mainstream, Lance Taylor, Harvard University Press, p. 159: "Kregel (2000) points out that there are at least three theories of the liquidity trap in the literature--Keynes own analyses [...] Hicks' [in] 1936 and 1937 [...] and a view that can be attributed to Fisher in the 1930s and Paul Krugman in latter days"
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  57. "It's Baaack: Japan's Slump and the Return of the Liquidity Trap", Paul R. Krugman, Kathryn M. Dominquez, Kenneth Rogoff. Brookings Papers on Economic Activity, Vol. 1998, No. 2 (1998), pp. 137–205
  58. 58.0 58.1 Krugman, Paul (2000), "Thinking About the Liquidity Trap", Journal of the Japanese and International Economies, v.14, no.4, Dec 2000, pp. 221–237.
  59. "Reply to Nelson and Schwartz", Paul Krugman, Journal of Monetary Economics, v. 55, no. 4, pp. 857–60 05-23-2008
  60. Krugman, Paul (1999). "The Return of Depression Economics", pp. 70–77. W. W. Norton, New York Template:ISBN
  61. "Japan's Trap", May 2008. [4] Retrieved 08-22-2009
  62. "Further Notes on Japan's Liquidity Trap", Paul Krugman
  63. Restoring Japan's economic growth, Adam Posen, Petersen Institute, September 1, 1998, Template:ISBN , p. 123,
  64. "What is wrong with Japan?", Nihon Keizai Shinbun, 1997 [5]
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  66. "Some Reasons Why a New Crisis Needs a New Paradigm of Economic Thought", Keiichiro Kobayashi, RIETI Report No.108, Research Institute of Economy, Trade & Industry (Japan), 07-31-2009
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  76. Prize Committee of the Royal Swedish Academy of Sciences, October 13, 2008, Scientific background on the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2008, "Trade and Geography – Economies of Scale, Differentiated Products and Transport Costs"
  77. Avinash Dixit, The Journal of Economic Perspectives, Vol. 7, No. 2 (Spring, 1993), pp. 173–88, In Honor of Paul Krugman: Winner of the John Bates Clark Medal, Retrieved March 28, 2007.
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  94. 94.0 94.1 Krugman, Paul, Rolling Stone. December 14, 2006, "The Great Wealth Transfer"
  95. 95.0 95.1 "Nobelpristagaren i ekonomi 2008: Paul Krugman", speech by Paul Krugman (Retrieved December 26, 2008) 00:43 "The title of The Conscience of a Liberal [...] is a reference to a book published almost 50 years ago in the United States called The Conscience of a Conservative by Barry Goldwater. That book is often taken to be the origin, the start, of a movement that ended up dominating U.S. politics that reached its first pinnacle under Ronald Reagan and then reached its full control of the U.S. government for most of the last eight years."
  96. 96.0 96.1 96.2 Michael Tomasky, The New York Review of Books, November 22, 2007, "The Partisan"
  97. Krugman, Paul. The Conscience of a Liberal, 2007, W.W. Norton & Co. Template:ISBN p. 182
  98. Conscience of a Liberal, p. 102
  99. Conscience of a Liberal, p. 108
  100. October 17, 2007 – Krugman "On Healthcare, Tax Cuts, Social Security, the Mortgage Crisis and Alan Greenspan", in response to Alan Greenspan's September 24 appearance with Naomi Klein on Democracy Now!
  101. "Malefactors of Megawealth" David M. Kennedy
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  126. "Capital Control Freaks: How Malaysia got away with economic heresy", Slate, September 27, 1999. Retrieved 08-25-2009
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  129. "The Liberalization And Management Of Capital Flows: An Institutional View" November 14, 2012
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  141. Paul Krugman. "Behind the Curve". The New York Times. March 9, 2009.
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  162. Template:Cite book "[Krugman and Obstfeld] seem to want to shame students into believing that there are no well-grounded arguments against coercing poor countries into free trade. [...] This is poor logic, and pernicious insensitivity."
  163. 163.0 163.1 Template:Cite web
  164. Template:Cite book "As E.P. Thompson once noted, there are always willing experts and opinion leaders, such as Friedman and Krugman, to give a patina of legitimacy to the claims of the powerful [with their] ill-concealed cheer-leading ...."
  165. Template:Cite book
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  168. Reckonings; A Rent Affair, by Paul Krugman, The New York Times, June 7, 2000
  169. Inequality and the City, by Paul Krugman, The New York Times, November 30, 2015
  170. True Blue Americans, by Paul Krugman, The New York Times, May 7, 2002
  171. Book review of Living Wage: What It Is and Why We Need It Paul Krugman, Washington Monthly, September 1, 1998
  172. Driving Under the Influence, by Paul Krugman, The New York Times, June 25, 2000
  173. A Failed Mission, by Paul Krugman, The New York Times, February 4, 2003
  174. Template:Cite news
  175. Reckonings; Pursuing Happiness, by Paul Krugman, The New York Times, March 29, 2000
  176. Reckonings; Blessed Are the Weak, by Paul Krugman, The New York Times, May 3, 2000
  177. The Crisis of Zionism, by Paul Krugman, The New York Times, April 24, 2012
  178. "Republicans and Race", Paul Krugman, The New York Times, 11-19-2007
  179. "The Town Hall Mob", Paul Krugman, The New York Times, 08-07-2009
  180. [The Conscience of a Liberal: Book Review], William Amponsah, Savannah Daily News, 12-03-2007
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  183. "Gordon Does Good". October 12, 2008. Retrieved June 8, 2009.
  184. "Gordon the Unlucky". June 7, 2009. Retrieved June 8, 2009.
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  186. Paul Krugman, "Your questions answered", blog, January 10, 2003, Retrieved December 19, 2007
  187. Paul Krugman, "About my son", The New York Times blog, December 19, 2007
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External links Edit

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