Krugman in 2008
Paul Robin Krugman
February 28, 1953
|Institution|| City University of New York |
London School of Economics
|Field|| International economics |
|Alma mater|| Massachusetts Institute of Technology |
|Influences|| Avinash Dixit |
John Maynard Keynes
|Contributions|| International trade theory |
New trade theory
New economic geography
|Awards|| John Bates Clark Medal (1991)|
Princess of Asturias Awards (2004)
Nobel Memorial Prize in Economic Sciences (2008)
|Information at IDEAS / RePEc|
Paul Robin Krugman ( // (
An economist is a practitioner in the social science discipline of economics.
The Graduate School and University Center of the City University of New York is a public research institution and post-graduate university in New York City. It is the principal doctoral-granting institution of the City University of New York (CUNY) system. The school is situated in a nine-story landmark building at 365 Fifth Avenue at the corner of 34th Street in the Midtown neighborhood of Manhattan, across the corner from the Empire State Building. The Graduate Center has 4,600 students, 31 doctoral programs, 14 master's programs, and 30 research centers and institutes. A core faculty of approximately 140 is supplemented by over 1,800 additional faculty members drawn from throughout CUNY's eleven senior colleges and New York City's cultural and scientific institutions.
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.Krugman was President of the Eastern Economic Association in 2010, and is among the most influential economists in the world. He is known in academia for his work on international economics (including trade theory and international finance), economic geography, liquidity traps, and currency crises.
Princeton University is a private Ivy League research university in Princeton, New Jersey. Founded in 1746 in Elizabeth as the College of New Jersey, Princeton is the fourth-oldest institution of higher education in the United States and one of the nine colonial colleges chartered before the American Revolution. The institution moved to Newark in 1747, then to the current site nine years later, and renamed itself Princeton University in 1896.
Emeritus, in its current usage, is an adjective used to designate a retired chairperson, professor, pastor, bishop, pope, director, president, prime minister, rabbi, emperor, or other person.
The London School of Economics is a public research university located in London, England, and a member institution of the federal University of London. Founded in 1895 by Fabian Society members Sidney Webb, Beatrice Webb, Graham Wallas, and George Bernard Shaw for the betterment of society, LSE joined the University of London in 1900 and established its first degree courses under the auspices of the University in 1901. LSE started awarding its own degrees in its own name in 2008, prior to which it awarded degrees of the University of London.
Krugman is the author or editor of 27 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.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. 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 . His popular commentary has attracted widespread attention and comments, both positive and negative.
Fortune is an American multinational business magazine headquartered in New York City, United States. It is published by Fortune Media Group Holdings, owned by Thai businessman Chatchaval Jiaravanon. The publication was founded by Henry Luce in 1929. The magazine competes with Forbes and Bloomberg Businessweek in the national business magazine category and distinguishes itself with long, in-depth feature articles. The magazine regularly publishes ranked lists, including the Fortune 500, a ranking of companies by revenue that it has published annually since 1955.
Slate is an online magazine that covers current affairs, politics, and culture in the United States. It is known—and sometimes criticized—for adopting contrarian views, giving rise to the term "Slate Pitches". It has a generally liberal editorial stance.
In economics, income distribution is how a nation's total GDP is distributed amongst its population. Income and its distribution have always been a central concern of economic theory and economic policy. Classical economists such as Adam Smith, Thomas Malthus, and David Ricardo were mainly concerned with factor income distribution, that is, the distribution of income between the main factors of production, land, labour and capital. Modern economists have also addressed this issue, but have been more concerned with the distribution of income across individuals and households. Important theoretical and policy concerns include the balance between income inequality and economic growth, and their often inverse relationship.
Krugman was born to a Russian and Jewish family,the son of Anita and David Krugman. In 1922, his paternal grandparents immigrated to the United States from Brest, Belarus, at that time a part of Poland. He was born in Albany, New York, and grew up in Merrick, a hamlet in Nassau County. He graduated from John F. Kennedy High School in Bellmore. 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.
American Jews, or Jewish Americans, are Americans who are Jews, whether by religion, ethnicity, or nationality. Today the Jewish community in the United States consists primarily of Ashkenazi Jews, who descend from diaspora Jewish populations of Central and Eastern Europe and comprise about 90-95% of the American Jewish population. Most American Ashkenazim are US-born, with a dwindling number of now-elderly earlier immigrants, as well as some more recent foreign-born immigrants.
Brest, formerly Brest-Litowsk, is a city in Belarus at the border with Poland opposite the Polish city of Terespol, where the Bug and Mukhavets rivers meet. It is the capital city of the Brest Region.
The Second Polish Republic, commonly known as interwar Poland, refers to the country of Poland in the period between the First and Second World Wars (1918–1939). Officially known as the Republic of Poland, the state was re-established in 1918, in the aftermath of World War I. The Second Republic ceased to exist in 1939, when Poland was invaded by Nazi Germany, the Soviet Union and the Slovak Republic, marking the beginning of the European theatre of World War II.
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.
A Bachelor of Arts is a bachelor's degree awarded for an undergraduate course or program in either the liberal arts, sciences, or both. Bachelor of Arts programs generally take three to four years depending on the country, institution, and specific specializations, majors, or minors. The word baccalaureus should not be confused with baccalaureatus, which refers to the one- to two-year postgraduate Bachelor of Arts with Honors degree in some countries.
Yale University is a private Ivy League research university in New Haven, Connecticut. Founded in 1701, it is the third-oldest institution of higher education in the United States and one of the nine Colonial Colleges chartered before the American Revolution.
A Doctor of Philosophy is the highest university degree that is conferred after a course of study by universities in most countries. PhDs are awarded for programs across the whole breadth of academic fields. As an earned research degree, those studying for a PhD are usually required to produce original research that expands the boundaries of knowledge, normally in the form of a thesis or dissertation, and defend their work against experts in the field. The completion of a PhD is often a requirement for employment as a university professor, researcher, or scientist in many fields. Individuals who have earned a Doctor of Philosophy degree may, in many jurisdictions, use the title Doctor or, in non-English-speaking countries, variants such as "Dr. phil." with their name, although the proper etiquette associated with this usage may also be subject to the professional ethics of their own scholarly field, culture, or society. Those who teach at universities or work in academic, educational, or research fields are usually addressed by this title "professionally and socially in a salutation or conversation." Alternatively, holders may use post-nominal letters such as "Ph.D.", "PhD", or "DPhil". It is, however, considered incorrect to use both the title and post-nominals at the same time.
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".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". 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".
Rüdiger "Rudi" Dornbusch was a German economist who worked for most of his career in the United States.
The Theory of Interstellar Trade is a paper written in 1978 by the economist Paul Krugman. The paper was first published in March 2010 in the journal Economic Inquiry. He described the paper as something he wrote to cheer himself up when he was an "oppressed assistant professor" caught up in the academic rat race.
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.
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.He has been a research associate at the National Bureau of Economic Research since 1979. Krugman was President of the Eastern Economic Association in 2010. 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.
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.Krugman's International Economics: Theory and Policy, co-authored with Maurice Obstfeld, is a standard undergraduate textbook on international economics. 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. 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.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."
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.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.
Krugman modeled a 'preference for diversity' by assuming a CES utility function like that in a 1977 paper by Avinash Dixit and Joseph Stiglitz.Many models of international trade now follow Krugman's lead, incorporating economies of scale in production and a preference for diversity in consumption. This way of modeling trade has come to be called New Trade Theory.
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."The home market effect was an unexpected result, and Krugman initially questioned it, but ultimately concluded that the mathematics of the model were correct.
When there are economies of scale in production, it is possible that countries may become 'locked into' disadvantageous patterns of trade.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. 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. Krugman has usually been supportive of free trade and globalization. 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.
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 .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." This would become Krugman's most-cited academic paper: by early 2009, it had 857 citations, more than double his second-ranked paper. Krugman called the paper "the love of my life in academic work."
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."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.
Manufacturing is characterized by increasing returns to scale and less restrictive and expansive land qualifications as compared to agricultural uses. So, geographically where can manufacturing be predicted to develop? Krugman states that manufacturing's geographical range is inherently limited by economies of scale, but also that manufacturing will establish and accrue itself in an area of high demand. Production that occurs adjacent to demand will result in lower transportation costs, but demand, as a result, will be greater due to concentrated nearby production. These forces act upon one another simultaneously, producing manufacturing and population agglomeration. Population will increase in these areas due to the more highly developed infrastructure and nearby production, therefore lowering the expense of good, while economies of scale provide varied choices of goods and services. These forces will feed into each other until the greater portion of the urban population and manufacturing hubs are concentrated into a relatively insular geographic area.
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.Krugman's paper is considered one of the main contributions to the 'first generation' of currency crisis models, and it is his second-most-cited paper (457 citations as of early 2009).
In response to the global financial crisis of 2008, Krugman proposed, in an informal "mimeo" style of publication,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. He first announced that he was working on such a model on his blog, on October 5, 2008. Within days of its appearance, it was being discussed on some popular economics-oriented blogs. The note was soon being cited in papers (draft and published) by other economists, even though it had not itself been through ordinary peer review processes.
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Krugman has done much to revive discussion of the liquidity trap as a topic in economics.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. The debate he started at that time over liquidity traps and what policies best address them continues in the economics literature.
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.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." The proposal appeared first in a web posting on his academic site. 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.
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.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.
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."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. 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. The manifesto received over four thousand signatures within two days of its launch, and has attracted both positive and critical responses.
|Wikinews has related news: American Paul Krugman wins Nobel prize for economics|
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. 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."
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.
Foreign Policy named Krugman one of its 2012 FP Top 100 Global Thinkers "for wielding his acid pen against austerity".
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.
In 2007, Krugman published The Conscience of a Liberal , whose title refers to Barry Goldwater's Conscience of a Conservative .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.Krugman argues that Ronald Reagan had used the "Southern Strategy" to signal sympathy for racism without saying anything overtly racist, citing as an example Reagan's coining of the term "welfare queen".
In his book, Krugman proposed a "new New Deal", which included placing more emphasis on social and medical programs and less on national defense.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." 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".
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.
Martin Wolf has written that Krugman is both the "most hated and most admired columnist in the US".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." 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." Krugman has been described as the most controversial economist in his generation and according to Michael Tomasky since 1992 he has moved "from being a center-left scholar to being a liberal polemicist."
From the mid-1990s onwards, Krugman wrote for Fortune (1997–99)and Slate (1996–99), 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.
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.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." 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."
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."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 ..." Krugman accused Bush of repeatedly misrepresenting his proposals, and criticized the proposals themselves. 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." 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." 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." 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."
Krugman's columns have drawn criticism as well as praise. A 2003 article in The Economistquestioned 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. 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."
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 people[ who? ] thought that he was too partisan to be a columnist for The New York Times, he was revered on the left. 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".
Krugman was noteworthy for his fierce opposition to the 2016 presidential campaign of Bernie Sanders. On January 19, 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.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".
On the 12 July 2016, Krugman tweeted "leprechaun economics", in response to Central Statistics Office (Ireland) data that 2015 GDP grew 26.3% and 2015 GNP grew 18.7%. The leprechaun economics affair (proved in 2018 to be Apple restructuring its double Irish subsidiaries), led to the Central Bank of Ireland introducing a new economic statistic, Modified gross national income (or GNI*) to better measure the Irish economy (2016 Irish GDP is 143% of 2016 Irish GNI*). The term leprechaun economics has since been used by Krugman,and others, to describe distorted/unsound economic data.
Krugman has harshly criticized the Trump administration.He has also remarked several times on how the depth of his disapproval of Trump tempts him to just assume the worst, such that he has to be careful to check his personal beliefs against the weight of evidence. Following Trump's election, Krugman suggested that "we are very probably looking at a global recession, with no end in sight." Within two days, he retracted that statement, characterizing it as a lapse in judgment due to having been horrified and depressed by the outcome of the election.
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.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.
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."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. An empirical study found that the Malaysian policies produced faster economic recovery and smaller declines in employment and real wages. 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." Krugman more recently pointed out that emergency capital controls have even been endorsed by the IMF, and are no longer considered radical policy.
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.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. In addition, he was against Bush's proposal to privatize social security.
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."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.
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." 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."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. 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
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.Jeremy Warner of The Daily Telegraph accused Krugman of advocating a return to self-destructive protectionism.
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."
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.
In a 2014 review of Thomas Piketty's Capital in the Twenty-First Century he stated we are in a Second Gilded Age.
Krugman identifies as a Keynesianand a saltwater economist, and he has criticized the freshwater school on macroeconomics. 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. 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.
In the wake of the 2007–2009 financial crisis he has remarked that he is "gravitating towards a Keynes-Fisher-Minsky view of macroeconomics."Post-Keynesian observers cite commonalities between Krugman's views and those of the Post-Keynesian school, although Krugman has been critical of some Post-Keynesian economists such as John Kenneth Galbraith – whose works The New Industrial State (1967) and Economics in Perspective (1987) Krugman has referred to as not "real economic theory" and "remarkably ill-informed" respectively. 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.
Krugman's support for free trade in the 1980s–1990s provoked some ire from the anti-globalization movement.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'." However, Krugman argues in the same article that, given the findings of New Trade Theory, "[free trade] has shifted from optimum to reasonable rule of thumb ... it can never again be asserted as the policy that economic theory tells us is always right." In the article, Krugman comes out in favor of 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 notes that increasing returns and strategic trade theory do not disprove the underlying truth of comparative advantage.
In 2015, Krugman noted his ambivalence about the proposed Trans-Pacific Partnership, as the agreement was not mainly about trade and, "whatever you may say about the benefits of free trade, most of those benefits have already been realized" [by existing agreements].
In 2009, Krugman made a significant departure from his general support for free trade, entertaining the idea of a 25% tariff on Chinese imports as a retaliation for China's policy of maintaining a low value for the renminbi, which many saw as hostile currency manipulation, artificially making their exports more competitive.
More recently he has written, in keeping with his long-term support for trade (while emphasizing that it is not the only or even most-important economic issue) that protectionism does not directly cause recessions, but can make economies less efficient and reduce long-term growth. Indeed, if there is a trade war, imports would decrease as much as exports, so employment should not be strongly impacted, at least in the medium to long run.He considers that the United States should not repeat Reagan's 1981 policy on taxes and quotas on imported products. Even if it does not produce a recession, protectionism would shock "value chains" and disrupt jobs and communities in the same way as free trade in the past. In addition, other countries would take retaliatory measures against US exports. Krugman recommended against the abandonment of NAFTA, because it could cause economic losses and disruptions to businesses, jobs, and communities. He noted that although free trade has harmed some industries, communities, and some workers, it remains a win-win system overall, enriching both parties to the agreement at the national level; a trade war is equivalently negative for the nations involved, even while it may benefit some individuals or industries within each nation.
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". 's Michael Hirsh remarked,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. In 1996, Newsweek
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.
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,likened the opposition against free trade and globalization to the opposition against evolution via natural selection (1996), opposed farm subsidies, argued that sweatshops are preferable to unemployment, dismissed the case for living wages (1998), and argued against mandates, subsidies, and tax breaks for ethanol (2000). 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. Krugman has also criticized U.S. zoning laws and European labor market regulation. 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".
Krugman endorsed Democratic candidate Hillary Clinton in the run-up for the 2016 U.S. presidential election.
Krugman has criticized the Republican Party leadership for what he sees as a strategic (but largely tacit) reliance on racial divisions.In his Conscience of a Liberal, he wrote:
The changing politics of race made it possible for a revived conservative movement, whose ultimate goal was to reverse the achievements of the New Deal, to win national elections – even though it supported policies that favored the interests of a narrow elite over those of middle- and lower-income Americans.
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."Krugman found the time "thrilling, then disillusioning". He did not fit into the Washington political environment, and was not tempted to stay on.
According to Krugman, Gordon Brown and his party were unfairly blamed for the late-2000s financial crisis.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. 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".
Krugman opposed the 2003 invasion of Iraq. He wrote in his New York Times column: "What we should have learned from the Iraq debacle was that you should always be skeptical and that you should never rely on supposed authority. If you hear that ‘everyone’ supports a policy, whether it's a war of choice or fiscal austerity, you should ask whether ‘everyone’ has been defined to exclude anyone expressing a different opinion."
Krugman has been a vocal critic of Donald Trump and his administration.His criticisms have included the president's climate change proposals, economic policy, the Republican tax plan and Trump's foreign policy initiatives. Krugman has often used his New York Times Op-Ed column to set out arguments against the President's policies.
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 received her BA from the University of Chicago and her PhD from the University of California, Berkeley.She, as did Krugman, taught at MIT. Together, Krugman and his wife have collaborated on several economics textbooks. Although rumors began to circulate in early 2007 that Krugman's "son" was working for Hillary Clinton's campaign, Krugman reiterated in his New York Times op-ed column that he and his wife are childless.
Krugman currently lives in New York City.Upon retiring from Princeton after fifteen years of teaching in June 2015, he addressed the issue in his column, stating that while he retains the utmost praise and respect for Princeton, he wishes to reside in New York City and hopes to focus more on public policy issues. He subsequently became 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.
Krugman reports that he is a distant relative of conservative journalist David Frum.He has described himself as a "Loner. Ordinarily shy. Shy with individuals."
The Austrian School is a heterodox school of economic thought that is based on methodological individualism—the concept that social phenomena result exclusively from the motivations and actions of individuals.
Milton Friedman was an American economist who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the complexity of stabilization policy. With George Stigler and others, Friedman was among the intellectual leaders of the second generation of Chicago school of economics, a methodological movement at the University of Chicago's Department of Economics, Law School and Graduate School of Business from the 1940s onward. Several students and young professors who were recruited or mentored by Friedman at Chicago went on to become leading economists, including Gary Becker, Robert Fogel, Thomas Sowell and Robert Lucas Jr.
In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending. This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock or the bursting of an economic bubble. In the United States, it is defined as "a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales". In the United Kingdom, it is defined as a negative economic growth for two consecutive quarters.
Regional science is a field of the social sciences concerned with analytical approaches to problems that are specifically urban, rural, or regional. Topics in regional science include, but are not limited to location theory or spatial economics, location modeling, transportation, migration analysis, land use and urban development, interindustry analysis, environmental and ecological analysis, resource management, urban and regional policy analysis, geographical information systems, and spatial data analysis. In the broadest sense, any social science analysis that has a spatial dimension is embraced by regional scientists.
Joseph Eugene Stiglitz is an American economist, public policy analyst, and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979). He is a former senior vice president and chief economist of the World Bank and is a former member and chairman of the Council of Economic Advisers. He is known for his support of Georgist public finance theory and for his critical view of the management of globalization, of laissez-faire economists, and of international institutions such as the International Monetary Fund and the World Bank.
Protectionism is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. Proponents claim that protectionist policies shield the producers, businesses, and workers of the import-competing sector in the country from foreign competitors. However, they also reduce trade and adversely affect consumers in general, and harm the producers and workers in export sectors, both in the country implementing protectionist policies and in the countries protected against.
A liquidity trap is a situation, described in Keynesian economics, in which, "after the rate of interest has fallen to a certain level, liquidity preference may become virtually absolute in the sense that almost everyone prefers holding cash rather than holding a debt which yields so low a rate of interest."
Market fundamentalism is a term applied to a strong belief in the ability of unregulated laissez-faire or free market policies to solve most economic and social problems. The expression "market fundamentalism" was popularized by business magnate and philanthropist George Soros in his book The Crisis of Global Capitalism (1998), in which he writes: "This idea was called laissez faire in the nineteenth century ... I have found a better name for it: market fundamentalism". P. Sainath believes Jeremy Seabrook, a journalist and campaigner, first used the term. The term was used by John Langmore and John Quiggin in their 1994 book Work for All. See also Jonathan Benthall, Anthropology Today editorial, 1991.
Jagdish Natwarlal Bhagwati is an Indian-born American economist. He is a University Professor of economics and law at Columbia University. Bhagwati is notable for his research in international trade and for his advocacy of free trade.
Donald Joseph Boudreaux is an American economist, author, professor, and co-director of the Program on the American Economy and Globalization at the Mercatus Center at George Mason University in Fairfax, Virginia.
Olivier Jean Blanchard is a French economist and professor who is a Senior Fellow at the Peterson Institute for International Economics. He was the chief economist at the International Monetary Fund from September 1, 2008 to September 8, 2015. Blanchard was appointed to the position under the tenure of Dominique Strauss-Kahn; he was succeeded by Maurice Obstfeld. He also is a Robert M. Solow Professor of Economics emeritus at the Massachusetts Institute of Technology (MIT). He is one of the most cited economists in the world, according to IDEAS/RePEc.
Lawrence Mishel is distinguished fellow at the Economic Policy Institute in Washington, D.C., a pro-labor think-tank that seeks to advance the interests of American workers. He has been at EPI since 1987, first serving as Research Director, then as Vice-president and then as president from 2002 to 2017.
The history of economic thought deals with different thinkers and theories in the subject that became political economy and economics, from the ancient world to the present day in the 21st Century. This field encompasses many disparate schools of economic thought. Ancient Greek writers such as the philosopher Aristotle examined ideas about the art of wealth acquisition, and questioned whether property is best left in private or public hands. In the Middle Ages, scholasticists such as Thomas Aquinas argued that it was a moral obligation of businesses to sell goods at a just price.
Russell David "Russ" Roberts is an economist and a research fellow at Stanford University's Hoover Institution. He is well known for communicating economic ideas in understandable terms as host of the EconTalk podcast.
The Conscience of a Liberal is a 2007 book written by economist and Nobel laureate Paul Krugman. It was 24th on the New York Times Best Seller list in November 2007. The title was used originally in Senator Paul Wellstone's book of the same name in 2001. Wellstone's title was a response to Barry Goldwater's 1960 book The Conscience of a Conservative. In the book, Krugman studies the past 80 years of American history in the context of economic inequality. A central theme is the reemergence of both economic and political inequality since the 1970s. Krugman analyzes the causes behind these events and proposes a "new New Deal" for America.
Jared Bernstein is a Senior Fellow at the Center on Budget and Policy Priorities. From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joseph Biden in the Obama Administration. He was considered to be a progressive and "a strong advocate for workers."
Following the global financial crisis of 2007–08, there was a worldwide resurgence of interest in Keynesian economics among prominent economists and policy makers. This included discussions and implementation of economic policies in accordance with the recommendations made by John Maynard Keynes in response to the Great Depression of the 1930s—most especially fiscal stimulus and expansionary monetary policy.
The Nobel Memorial Prize in Economic Sciences, commonly referred to as the Nobel Prize in Economics, is an award for outstanding contributions to the field of economics, and generally regarded as the most prestigious award for that field. The award's official name is The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.
End This Depression Now! is a non-fiction book by the American economist Paul Krugman. He also writes a twice-weekly op-ed column for The New York Times and a blog named for his 2007 book The Conscience of a Liberal as well as teaches economics at Princeton University. The book is intended for a general audience and was published by W. W. Norton & Company in April 2012. Krugman has presented his book at the London School of Economics, on fora.tv, and elsewhere.
Richard E. Baldwin is a professor of international economics at the Graduate Institute of International and Development Studies in Geneva, where he has been researching globalization and trade for the past 30 years.. He is also ex-President of the Centre for Economic Policy Research (CEPR) and Editor-in-Chief of VoxEU, which he founded in June 2007. He is a research associate at the National Bureau of Economic Research. He was twice elected as a Member of the Council of the European Economic Association.
I have informed Princeton that I will be retiring at the end of next academic year, that is, in June 2015. In August 2015 I will join the faculty of the Graduate Center, City University of New York, as a professor in the Ph.D. program in economics. I will also become a distinguished scholar at the Graduate Center's Luxembourg Income Study Center.
One of the things Robin Wells and I did when writing our principles of economics textbook was to acquire and study a copy of the original, 1948 edition of Samuelson's textbook.
The workhorse model of this approach since 1991 has been the model of monopolistic competition due to Avinash Dixit and Joseph Stiglitz (1977). It was used by Paul Krugman (1979, 1980) to provide an approach to analyzing increasing returns in international trade.
Eric S. Maskin
Roger B. Myerson
| Laureate of the Nobel Memorial Prize in Economics |
Oliver E. Williamson