Paul Krugman

Who Is Paul Krugman?

Paul Krugman is a Neo-Keynesian economist and writer from the United States, known for his work on international economics and trade issues. Considered among the world's most influential economists, Krugman was awarded the Nobel Memorial Prize in Economics in 2008 for his work on New Trade Theory and New Economic Geography.

He has taught at Yale, Princeton, Stanford, and at the London School of Economics, where he now maintains the title of Centenary Professor. His current positions include distinguished professor of economics at the Graduate Center of the City University of New York, and he is a regular op-ed columnist for The New York Times with a column where he opines on economic and political issues.

Understanding Paul Krugman

Born in Albany, New York, in 1953, Krugman attended a public high school in Nassau County and then went on to Yale University. He received his BA in economics and graduated summa cum laude; he then went on to MIT for his graduate studies. He received his PhD from MIT in 1977 with a thesis titled "Essays on Flexible Exchange Rates" and became an assistant professor in economics at Yale in the fall of 1977.

In 1979, Krugman joined the economics faculty at MIT, and in 1983, he spent a year in the Reagan White House as a staff member of the Council of Economic Advisers (CEA). In 1984, he returned to MIT as a full professor, a position he held until the year 2000 when he joined Princeton faculty as a professor of economics and international affairs. He would remain at Princeton until retiring from there in 2015 to join the faculty at the City University of New York as a distinguished professor of economics. He remains a professor emeritus at Princeton, however, and is also a member of the Group of 30, also known as G30, who meet twice yearly to discuss issues of the global economy.

Contributions

Krugman has written on a range of issues in economics, including New Trade Theory, New Economic Geography, and macroeconomics. He is also a popular columnist and blogger as well as the author or editor of 27 books, including a standard text for economics students, International Economics: Theory and Policy, with Maurice Obstfeld, currently in its 7th edition.

New Trade Theory and New Economic Geography

Krugman developed New Trade Theory as an alternative to older theories that explain patterns of international trade as based on comparative advantage and natural resource endowments. Krugman explains observed patterns of trade in the modern era as based on the interaction of consumer preferences for diverse brands of products, which support the persistence of multiple close substitute products traded back and forth between similar countries, and the home market effect, which supports specialization in producing specific brands and concentrates their production in certain countries based on economies of scale.

Krugman's New Economic Geography grew out of New Trade Theory. New Economic Geography argues that based on the effects of economies of scale in manufacturing, such as agglomeration and the home market effect, industries (and associated economic growth) will tend to be tightly clustered in specific cities, regions, and countries rather than spread evenly around the world.

Finance and Macroeconomics

Krugman's early research on international currency crises and later paper on the transition of financial shocks have been highly influential, especially in the years during and since the financial crisis and Great Recession. These writings argue that inappropriately pegged exchange rates can be susceptible to sudden crises and that highly leveraged, globally interconnected financial institutions can quickly transmit financial crises around the world. Krugman has also written to emphasize the dangers of liquidity traps, which he says occurred in Japan's Lost Decade and the Great Recession, that spread financial crises into the real economy. He is a leading advocate of expansionary monetary policy to boost inflation and aggressive fiscal policy to directly boost aggregate demand.

Popular Writing

In addition to his scholarly work, Krugman is also an op-ed columnist for The New York Times, and he's also written for Fortune magazine, Slate, Foreign Affairs, Harvard Business Review, and Scientific American, plus hundreds of academic papers and commentary on economics and politics. His column in The New York Times is referred to as "The Conscience of a Liberal," and is published twice weekly on Tuesdays and Fridays. In 2007, Krugman released a book by the same name, and Krugman refers to himself as a "modern liberal."