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He retired from Princeton in June , and holds the title of professor emeritus there. Krugman is the author or editor of 27 books, including scholarly works, textbooks, and books for a more general audience, and has published over scholarly articles in professional journals and edited volumes.

A survey of economics professors named him their favorite living economist under the age of Krugman considers himself a modern liberal , referring to his books, his blog on The New York Times , and his book The Conscience of a Liberal. In , his maternal grandparents immigrated to the United States from Ukraine , [22] while in , his paternal grandparents arrived from Belarus. Kennedy High School in Bellmore. Since present-day science fell far short of “psychohistory”, Krugman turned to economics as the next best thing.

In , he successfully completed his PhD in three years, with a thesis titled Essays on flexible exchange rates.

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”. 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”.

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 He joined the faculty at MIT in He rejoined MIT as a full professor in He is also currently Centenary Professor at the London School of Economics, and a member of the Group of Thirty international economic body. 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. 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.

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 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.

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 paper by Avinash Dixit and Joseph Stiglitz.

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.

When there are economies of scale in production, it is possible that countries may become ‘ locked into ‘ disadvantageous patterns of trade. 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.

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 goods, 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 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 but instead end in a sudden speculative attack.

In response to the global financial crisis of , Krugman proposed, in an informal “mimeo” style of publication, [58] 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 [. This drives down prices, putting pressure on the balance sheets of other HLIs, and so on. Krugman has done much to revive discussion of the liquidity trap as a topic in economics. Krugman had argued in The Return of Depression Economics that Japan was in a liquidity trap in the late s, since the central bank could not drop interest rates any lower to escape economic stagnation.

Krugman has since drawn parallels between Japan’s ‘lost decade’ and the late s recession , arguing that expansionary fiscal policy is necessary as the major industrialized economies are mired in a liquidity trap. Krugman was one of the most prominent advocates of the — Keynesian resurgence , so much so that economics commentator Noah Smith referred to it as the “Krugman insurgency.

A May Hamilton College analysis of 26 politicians, journalists, and media commentators who made predictions in major newspaper columns or television news shows from September to December 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.

Krugman was elected to the American Philosophical Society in In the s, besides academic books and textbooks, Krugman increasingly began writing books for a general audience on issues he considered important for public policy. 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 , 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 s.

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. The book describes how the gap between rich and poor declined greatly during the middle of the century, and then widened in the last two decades to levels higher even than in the s.

In Conscience , Krugman argues that government policies played a much greater role than commonly thought both in reducing inequality in the s through s and in increasing it in the s 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. 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 late , Krugman published a substantial updating of an earlier work, entitled The Return of Depression Economics and the Crisis of 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 s.

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”. 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.

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 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 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.

You have to be very good at people skills, biting your tongue when people say silly things. I can move into a pristine office and within three days it will look like a grenade went off.

In , 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. Bush ‘s policy proposals. According to Krugman, this was partly due to “the silence of the media — those ‘liberal media’ conservatives complain about As Alan Blinder put it in , “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.

When I argue with them in my column this is a serious discussion. We really are in effect speaking across the transom here.

So that’s where I’m pushing. Krugman’s columns have drawn criticism as well as praise. A 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.

His column provoked an angry response and The New York Times was flooded with complaints. 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 presidential campaign of Bernie Sanders. On January 19, , 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.

Krugman has harshly criticized the Trump administration. In a 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. 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 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. In the early s, 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. In August , 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 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.

 
 

 

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