Paul Robin Krugman (/ˈkrʊɡmən/ (listen) KRUUG-mən; born February 28, 1953) 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. In 2008, Krugman was awarded the Nobel Memorial Prize in Economic Sciences for his contributions to New Trade Theory and New Economic Geography. 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.
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. Krugman is known in academia for his work on international economics (including trade theory and international finance), economic geography, liquidity traps, and currency crises.
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.
Krugman at a press conference after receiving the Nobel Prize in Economics in 2008
|Born||February 28, 1953|
|Institution||City University of New York|
London School of Economics
New Keynesian macroeconomics
|Alma mater||Massachusetts Institute of Technology|
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|
Krugman was born to a 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.
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.
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".
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.
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.
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.
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 Economist 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. 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 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.
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." 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 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."
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.
Krugman identifies as a Keynesian and 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. 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].
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". 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'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.
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".
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 President Trump and his administration. His criticisms have included the president's climate change proposals, 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.
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
10 Songs for the New Depression is the twenty-first studio album by American singer-songwriter Loudon Wainwright III, released in July 2010 through Proper Records. Released forty years following his first studio album, 10 Songs is Wainwright's first album since his Grammy Award-winning tribute project High Wide & Handsome: The Charlie Poole Project (2009). The concept album was inspired by the late-2000s global financial crisis and recession, and features Wainwright backed by his own banjo, guitar and ukulele performances.
Wainwright began writing songs for the album following the inauguration of Barack Obama in January 2009. The album features ten original songs and two cover versions of songs originally written and recorded during the Great Depression. Lyrical references throughout 10 Songs include economists Alan Greenspan, John Maynard Keynes and Paul Krugman, President Barack Obama, and the government program Car Allowance Rebate System (more commonly known as "cash for clunkers"). Overall, critical reception of the album was positive. 10 Songs reached peak positions of number thirty-eight on the United Kingdom's Top Independent Albums chart and number twelve on the Top 40 Independent Albums Breakers chart.Austerity
Austerity, otherwise known as balancing the budget, is a political-economic term referring to policies that aim to reduce government budget deficits through spending cuts, tax increases, or a combination of both. Austerity measures are used by governments that find it difficult to pay their debts. The measures are meant to reduce the budget deficit by bringing government revenues closer to expenditures, which is assumed to make the payment of debt easier. Austerity measures also demonstrate a government's fiscal discipline to creditors and credit rating agencies.
In most macroeconomic models, austerity policies generally increase unemployment as government spending falls. Cutbacks in government spending reduce employment in the public and may also do so in the private sector. Additionally, tax increases can reduce consumption by cutting household disposable income. Some claim that reducing spending may result in a higher debt-to-GDP ratio because government expenditure itself is a component of GDP. In the aftermath of the Great Recession, for instance, austerity measures in many European countries were followed by rising unemployment and debt-to-GDP ratios despite reductions in budget deficits. However, by 2019, the United Kingdom, which had followed this policy for a decade, saw its unemployment rate fall to its lowest in 44 years,
When an economy is operating at or near capacity, higher short-term deficit spending (stimulus) can cause interest rates to rise, resulting in a reduction in private investment, which in turn reduces economic growth. However, where there is excess capacity, the stimulus can result in an increase in employment and output. However, the efficacy of stimulus packages are disputed by some economists, including libertarians Thomas Sowell and the Nobel laureate Milton Friedman.Deficit hawk
Deficit hawk is a political slang term in the English speaking world for people who place great emphasis on keeping government budgets under control. 'Hawk' can be used to describe someone calling for harsh or pain-inducing measures (alluding to the predatory nature of hawks in the natural world) in many political contexts; in the specific context of deficit reduction, the term is more commonly applied to those advocating for cuts in government spending than to those supporting increases in taxes.
Economist and opinion writer Paul Krugman has popularized the use of "deficit scold" in place of deficit hawk. According to Krugman, a columnist of The New York Times, "the Peter G. Peterson Foundation is deficit-scold central; Peterson funding lies behind much of the movement." Deficit hawks often warn that unsustainable fiscal policies could lead to investors losing confidence in U.S. government bonds, which would in turn force an increase in interest rates. Krugman has dismissed this concern by saying that there is no evidence that these "bond vigilantes" will appear anytime soon.
The Concord Coalition is another influential political advocacy group dedicated to promoting a balanced budget in the United States. The Coalition is generally perceived as bipartisan.
Critics of deficit hawks have argued that hawks stoke fears about the deficit in order to dismantle the social safety net. William Greider claims, "Their real intent is to stymie the very spending programs that can deliver economic recovery and relief to battered citizens." Greider points to the example of World War II spending during the Great Depression, in which the government ran up massive deficits but set up America's postwar prosperity. And Dean Baker, co-director of the Center for Economic and Policy Research (CEPR), suggests a duplicity in their motives as well:It will matter far more to our children and grandchildren whether they share in the gains of economic growth than if they have to pay higher tax rates for Social Security and Medicare. The rich, with the full complicity of the media, are doing their best to keep national policy focused on the cost of Social Security and Medicare. But the arithmetic says that the upward redistribution to the wealthy is the far more important issue for future living standards.End This Depression Now!
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.Previous books include The Accidental Theorist, The Conscience of a Liberal, Fuzzy Math, The Great Unraveling, Peddling Prosperity, and two editions of The Return of Depression Economics (both editions being national bestsellers).John R. Levine
John R. Levine is an Internet author and consultant specializing in email infrastructure, spam filtering, and software patents.
He chaired the Anti-Spam Research Group (ASRG) of the Internet Research Task Force (IRTF), is president of CAUCE (the Coalition Against Unsolicited Commercial Email), is a member of the ICANN (Internet Corporation For Assigned Names and Numbers) Stability and Security Advisory Committee, and runs Taughannock Networks. He has co-authored many books, including The Internet For Dummies (with Carol Baroudi and Margaret Levine Young), UNIX For Dummies (with Margaret Levine Young), Fighting Spam for Dummies (with Margaret Levine Young, Ray Everett-Church), and flex & bison (O'Reilly). He was also the mayor of the village of Trumansburg, New York, United States from March 2004 until March 2007.
Levine graduated from Yale University in 1975 and earned his Ph.D. in Computer Science from Yale in 1984 with a thesis about the design and implementation of small databases. His roommate at Yale was economist Paul Krugman. Levine was a co-founder and board member of Segue Software and Senior Programmer at Javelin Software. He was a member of the R.E.S.I.S.T.O.R.S., one of the first computer clubs in the United States. Levine is the only moderator of the comp.compilers usenet group for 32 years.Leprechaun economics
Leprechaun economics is the term used by Nobel Prize-winning economist Paul Krugman to describe the 26.3 per cent increase in Irish 2015 GDP, that was later revised to 34.4 per cent, in a 12 July 2016 publication by the Irish Central Statistics Office ("CSO") restating 2015 Irish national accounts.
Leprechaun economics: Ireland reports 26 percent growth! But it doesn't make sense. Why are these in GDP?
While the event which caused the artificial Irish GDP growth occurred in Q1 2015, the Irish CSO had to delay the Irish 2015 GDP revision, and redact the release of its regular economic data in 2016–2017, to protect the source's identity. Only in Q1 2018, could economists confirm Apple as the source, and that "leprechaun economics" was the largest individual base erosion and profit shifting ("BEPS") action, and the largest quasi–tax inversion of a U.S. corporation, in history."Leprechaun economics" marked the first known replacement of Ireland's prohibited BEPS tool, the Double Irish, with the more powerful Irish BEPS tool, the Capital Allowances for Intangible Assets ("CAIA") tool, also called the "Green Jersey". Apple used the "Green Jersey" to restructure out of its hybrid–Double Irish BEPS tool, on which the EU Commission would levy a €13 billion fine in August 2016 for illegal avoidance of Irish taxes over the 2004–2014 period. Whereas Washington blocked the proposed USD 160 billion Pfizer–Allergan Irish tax inversion in April 2016, Apple executed a USD 300 billion tax inversion of its entire non–U.S. business to Ireland. Research in June 2018, using 2015 data, confirmed Ireland, a "major tax haven", was now the world's largest tax haven."Leprechaun economics" had material follow-on consequences:
Irish 2017 GDP was 162% of 2017 Irish GNI* (EU–28 2017 GDP was 100% of GNI). Post "leprechaun economics", Ireland's public "debt metrics" differ dramatically depending on whether Debt-to-GDP, Debt-to-GNI* or Debt-per-Capita is used. Ireland's 2016 public Debt-per-Capita is only exceeded by Japan.List of Nobel laureates affiliated with the London School of Economics
A list of Nobel laureates affiliated with the London School of Economics. By official figures 18 Nobel Prizes in economics, peace and literature have been awarded to LSE alumni and staff. By 2016, 27% (or 13 out of 48) of all the Nobel Prizes in Economics have been awarded or jointly awarded to LSE alumni, current staff or former staff, making up 17% (13 out of 78) of all laureates. LSE alumni and staff have also won 3 Nobel Peace Prizes, and 2 Nobel Prizes in Literature.
1950: Ralph Bunche (Peace)
1979: Sir William Arthur Lewis (Economics)
1991: Ronald Coase (Economics)
1999: Robert Mundell (Economics)
2007: Leonid Hurwicz (Economics)
2016: Juan Manuel Santos (Peace)Founders and professors
1925: George Bernard Shaw (Literature)
1950: Bertrand Russell (Literature)
1959: Philip Noel-Baker (Peace)
1972: Sir John Hicks (Economics)
1974: Friedrich von Hayek (Economics)
1977: James Meade (Economics)
1990: Merton Miller (Economics)
1998: Amartya Sen (Economics)
2001: George Akerlof (Economics)
2008: Paul Krugman (Economics)
2010: Christopher A. Pissarides (Economics)
2016: Oliver Hart (Economics)Non-alumni1987: Óscar Arias (Peace)Mark Thoma
Mark Allen Thoma (born December 15, 1956) is a macroeconomist and econometrician and a Professor of Economics at the Department of Economics of the University of Oregon. Thoma is best known as a regular columnist for The Fiscal Times through his blog "Economist's View", which Paul Krugman called "the best place by far to keep up with the latest in economic discourse", and as an analyst at CBS MoneyWatch. He is also a regular contributor to EconoMonitor.Peddling Prosperity
Peddling Prosperity: Economic Sense and Nonsense in an Age of Diminished Expectations is a book by Nobel laureate and New York Times columnist Paul Krugman, first published in 1994 by W. W. Norton & Company.Robert P. Murphy
Robert Patrick Murphy (born 23 May 1976) is an American economist, consultant and author. He is an economist with the Institute for Energy Research (IER) specializing in climate change and a research fellow with the Independent Institute, He was a senior fellow in business and economic studies at the Pacific Research Institute, and he is a senior fellow at the Ludwig von Mises Institute. In addition to economic subjects, Murphy writes about, and has presented an online video class in, anarcho-capitalism on the Mises Institute website.Murphy is also noteworthy, and has been criticized by economists Brad DeLong and Paul Krugman for, repeatedly predicting that the quantitative easing practiced by the Federal Reserve in the late 2000s would create double-digit inflation and economic collapse—predictions that did not come to fruition. Murphy is a Christian, and has written articles expressing support for a literal interpretation of the Bible and skepticism of evolutionary theory.Robin Wells
Robin Elizabeth Wells (born 1959), an American economist. She is the co-author of several economics texts.Speculative attack
In economics, a speculative attack is a precipitous acquisition of some assets (currencies, gold, emission permits, remaining quotas) by previously inactive speculators. The first model of a speculative attack was contained in a 1975 discussion paper on the gold market by Stephen Salant and Dale Henderson at the Federal Reserve Board. Paul Krugman, who visited the Board as a graduate student intern, soon adapted their mechanism to explain speculative attacks in the foreign exchange market.There are now many hundreds of journal articles on financial speculative attacks, which are typically grouped into three categories: first, second, and third generation models. Salant has continued to explore real speculative attacks in a series of six articles.Sunday Review
Sunday Review is the opinion section of The New York Times. It contains columns by a number of regular contributors (such as David Brooks and Paul Krugman), and usually includes op-eds by the Editorial Board.Tax Foundation
The Tax Foundation is a Washington, D.C.-based think tank, founded in 1937, that collects data and publishes research studies on U.S. tax policies at both the federal and state levels. The Foundation's stated mission is to "improve lives through tax policy research and education that leads to greater economic growth and opportunity." The Tax Foundation is organized as a 501(c)(3) tax-exempt non-profit educational and research organization.
The Tax Foundation was founded in 1937 by a group of prominent businessmen in order to "monitor the tax and spending policies of government agencies". It is generally critical of tax increases and high taxation. The organization is organized into three primary areas of research, carried out by the Foundation's Center for Federal Tax Policy, the Center for State Tax Policy and the Center for Legal Reform. The group is known for its annual reports such as Facts & Figures: How Does Your State Compare, which was first produced in 1941, and its "Tax Freedom Day" brochures, which it has produced since the early 1970s.The Conscience of a Liberal
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.The Daily Currant
The Daily Currant was an American satirical news blog that focuses on politics, technology, and entertainment. A number of its satirical stories have been taken for true news reports by press.The Daily Currant is a competitor to The Onion. According to Quantcast, the site garnered over 1.5 million page views a month.The Great Unraveling
For the rock band, see The Great Unraveling (band).The Great Unraveling: Losing Our Way in the New Century is a book by American economist and Nobel laureate Paul Krugman, consisting of a collection of his columns for The New York Times (and some for Slate and Fortune). The collected columns were concerned mainly with the U.S. economy in the early 2000s, and about the economic and foreign policies of the George W. Bush administration.The book was a bestseller, and was 3rd on the New York Times Best Seller list for the week of October 5, 2003, and remained on the best seller list for eight weeks. It was listed as one of the 'notable books' of 2003 by The New York Times.The Return of Depression Economics and the Crisis of 2008
The Return of Depression Economics and the Crisis of 2008 is a non-fiction book by American economist and winner of the Nobel Prize in economics Paul Krugman. The 2008 book is an updated version of his 1999 work, The Return of Depression Economics and draws parallels between the 2008 financial crisis and the Great Depression. Krugman 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 and teaches economics at Princeton University.The Theory of Interstellar Trade
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 analyzed the question of
How should interest rates on goods in transit be computed when the goods travel at close to the speed of light? This is a problem because the time taken in transit will appear less to an observer traveling with the goods than to a stationary observer.
Krugman emphasized that in spite of its farcical subject matter, the economic analysis in the paper is correctly done. In his own words,
while the subject of this paper is silly, the analysis actually does make sense. This paper, then, is a serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics.