Paul Krugman facts for kids
Quick facts for kids
Paul Krugman
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Krugman in 2023
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Paul Robin Krugman
February 28, 1953 Albany, New York, U.S.
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New Keynesian economics |
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Rudi Dornbusch |
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Paul Robin Krugman (born February 28, 1953) is an American economist who teaches at the City University of New York. He was a writer for The New York Times newspaper from 2000 to 2024.
In 2008, Krugman won the Nobel Memorial Prize in Economic Sciences. He received this award for his important ideas about how countries trade with each other and how economic activities are spread out geographically. The Nobel committee recognized his work on how things like "economies of scale" (making things cheaper when you produce a lot) and people wanting different kinds of products affect trade and where businesses are located.
Krugman used to be a professor at MIT and Princeton University. He is also a professor at the London School of Economics. He is known for his work on how countries trade, how money moves between countries, and how economic activity is spread across different places. He has written many books and articles for both experts and the general public.
In December 2024, Krugman stopped writing his regular column for The New York Times. He then started writing a daily newsletter online.
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Early Life and Education
Paul Krugman was born in Albany, New York. He spent some of his childhood in Utica, New York, and later grew up in Merrick, New York. He went to John F. Kennedy High School.
Krugman became interested in economics after reading Isaac Asimov's Foundation novels. These books imagined a future science called "psychohistory" that could predict human behavior. Since that wasn't real, Krugman decided to study economics, which he saw as the closest thing.
In 1974, he earned his bachelor's degree in economics from Yale University. He then went on to get his PhD in economics from Massachusetts Institute of Technology (MIT) in just three years, finishing in 1977. His PhD paper was about "flexible exchange rates," which are how the value of one country's money changes compared to another's.
Krugman greatly admired his PhD advisor, Rudi Dornbusch. He said Dornbusch was "one of the great economics teachers of all time."
Academic Career
Krugman started as a professor at Yale University in 1977. He then joined MIT in 1979. For a year, from 1982 to 1983, he worked at the White House for the Council of Economic Advisers during the Ronald Reagan presidency. He returned to MIT as a full professor in 1984. He also taught at Stanford University and the London School of Economics.
In 2000, Krugman became a professor at Princeton University. He retired from Princeton in June 2015. After that, he joined the City University of New York as a professor.
Krugman has written a lot about how countries trade and how money moves around the world. He is considered one of the most important economists globally. His textbook, International Economics: Theory and Policy, is widely used by college students. He also writes economics books for everyone, not just experts.
The Nobel Prize Committee said that Krugman's main achievement was explaining how "economies of scale" (producing more means lower costs per item) and people wanting different products affect international trade and where businesses choose to set up.
New Trade Theory
Before Krugman's work, economists thought countries traded mainly because they were very different. For example, a country good at farming would trade food with a country good at making industrial products. But in the 20th century, countries that were quite similar started trading a lot with each other. This was hard to explain.
Krugman's "New Trade Theory," proposed in 1979, helped explain this. He suggested two main ideas:
- People like having a wide variety of products to choose from (like different car brands).
- Producing things in large amounts (economies of scale) makes them cheaper.
Because of these ideas, it makes sense for a car company like Volvo to make all its cars in just a few factories, maybe in one country. Then, those cars are sold all over the world. This way, they save money by producing a lot in one place, and consumers still get many choices.
Krugman's theory also looked at how much it costs to transport goods. This led to the "home market effect." This idea says that a country with a bigger demand for a certain product will likely produce more of that product and export it.
Krugman has generally supported free trade because it helps companies produce more efficiently and gives consumers more choices.
New Economic Geography
Krugman's work on New Trade Theory also led to his ideas on "new economic geography" in 1991. He realized that if trade is shaped by economies of scale, then businesses will tend to gather in certain places.
This means that instead of businesses spreading out evenly, they will concentrate in a few countries, regions, or cities. These places become densely populated and have higher incomes because more production happens there.
Agglomeration and Economies of Scale
Manufacturing businesses often benefit from making many items in one place (increasing returns to scale). Krugman explained that manufacturing tends to develop in areas where there is high demand. Producing goods close to where people want them lowers transportation costs. This then leads to even more demand in that area.
These forces work together, causing factories and people to gather in certain areas. Populations grow in these places because of better infrastructure and nearby production, which makes goods cheaper. This cycle continues until a large part of the population and manufacturing are in a relatively small area.
International Finance
Krugman has also studied how money moves between countries. He wrote about "currency crises" in 1979. He showed that when a country tries to keep its money's value fixed but it's not set correctly, it can lead to a sudden financial crisis.
During the 2008 financial crisis, Krugman suggested an "international finance multiplier." He explained that when large financial companies that invest across borders lose a lot of money in one market, they have to sell off assets everywhere. This causes prices to drop, hurting other financial companies, and the problem spreads quickly around the world.
Macroeconomics and Fiscal Policy
Krugman has helped bring back discussions about the "liquidity trap" in economics. A liquidity trap happens when interest rates are already very low, and the central bank can't lower them any further to boost the economy. He suggested that governments should spend more money (fiscal policy) and central banks should use unusual methods to help the economy when it's stuck in a liquidity trap.
He argued that Japan was in a liquidity trap in the 1990s. He later said that the Late-2000s recession was similar. He believes that governments need to spend more to create jobs and help the economy grow when it's in a slump.
Krugman was a strong supporter of the idea that government spending could help the economy recover after the 2008 crisis. He believes that cutting government spending during a downturn can make the problem worse.
Nobel Memorial Prize in Economic Sciences
Krugman was the only winner of the Nobel Memorial Prize in Economic Sciences in 2008. He received the prize for his work on New Trade Theory and New Economic Geography. The prize committee said his work helped everyone understand why countries trade and where economic activities are located.
Awards
Krugman has received many awards for his work:
- 1991: John Bates Clark Medal, given to a top American economist under 40.
- 2004: Princess of Asturias Awards in Social Sciences (Spain).
- 2008: Nobel Memorial Prize in Economic Sciences.
- 2011: Gerald Loeb Award for Commentary.
- 2014: James Joyce Award for his contributions to economics.
In 2011, a study found that Krugman was one of the most accurate forecasters among politicians, journalists, and commentators.
Author
Besides academic books, Krugman has written many books for the general public. These books often discuss important public policy issues.
In The Age of Diminished Expectations (1990), he wrote about the growing gap between rich and poor in the US. He believed this was partly due to technology changes and shifts in political ideas.
His book The Great Unraveling (2003) was a collection of his newspaper columns. In it, he argued that the large government deficits at the time were caused by tax cuts for the wealthy and increased government spending, including for the Iraq War. He warned that these policies were not sustainable.
In The Conscience of a Liberal (2007), Krugman looked at the history of wealth differences in the United States. He argued that government policies played a big role in both reducing and increasing inequality throughout the 20th century. He also suggested a "new New Deal" focusing more on social programs.
In 2008, he updated an earlier book, The Return of Depression Economics, to include the 2008 financial crisis. He discussed why the US financial system failed and how to prevent future crises.
His 2012 book, End This Depression Now!, argued that cutting government spending during an economic downturn makes things worse. He believed that stimulating the economy, either through public or private spending, was necessary to end the depression.
Commentator
Paul Krugman is known for his strong opinions and clear writing style. He has been called both "most hated and most admired columnist in the US." He has written for many publications, including Fortune, Slate, and The New York Times.
From 2000 to 2024, Krugman wrote a regular column for The New York Times. He often focused on economic and political issues, especially criticizing the policies of the George W. Bush administration. He believed that the media was not paying enough attention to these issues.
His columns have received both praise and criticism. Some people felt he was too political, while others admired his clear analysis. His blog, "The Conscience of a Liberal," also focused on economics and politics.
In 2016, Krugman criticized Bernie Sanders' presidential campaign, saying his plans were not realistic. He also strongly opposed Donald Trump's presidency.
In 2016, Krugman used the term "leprechaun economics" to describe unusual economic data from Ireland. This term caused some controversy, with the Irish Ambassador to the US calling it an "unacceptable slur."
Economic Views
Keynesian Economics
Krugman identifies as a Keynesian economist. This means he believes that government spending and central bank actions can help stabilize the economy, especially during downturns. He has often argued for more government spending to boost demand and create jobs.
He has also discussed the "paradox of toil" and the "paradox of flexibility" in his work. These ideas suggest that during a debt-driven slump, people working harder or being more flexible might actually make the economic problem worse by reducing overall demand.
Free Trade
Krugman has generally supported free trade. He believes that it makes economies more efficient and gives consumers more choices. However, he has also acknowledged that globalization can negatively affect some jobs and increase inequality in developed countries.
In 2009, during the Great Recession, he suggested a tariff (a tax on imports) on Chinese goods. He did this because he believed China was keeping its currency artificially low, which made its exports too cheap.
After the 2016 elections, when Donald Trump pushed for more protectionism (limiting imports), Krugman wrote that while protectionism can make economies less efficient, it might not directly cause recessions. However, he warned that it could disrupt businesses and jobs.
Immigration
In 2006, Krugman wrote that immigration could lower wages for workers who compete with immigrants. However, in 2024, he updated his view. He stated that "most labor economists now believe that immigrants don’t do much head-to-head competition with native-born workers; they bring different skills and take different jobs." He also noted that recent years with more immigration have seen good wage growth for lower-paid workers.
Green Economy
Krugman supports a shift to a green economy. He has backed the Green New Deal, which aims to address climate change and economic inequality. He believes that investments in a green economy are important and that concerns about government debt for such projects are often "vastly overstated." He also thinks that putting a price on greenhouse gas emissions will be necessary.
Political Views
Krugman describes himself as a liberal. He sees this as similar to what "social democratic" means in Europe. He has been described as someone who challenges the establishment, even though he has many traditional academic credentials.
He has sometimes supported free markets in areas where they are controversial. For example, he has argued against rent control and for market-based solutions to housing issues. He has also said that sweatshops, while not ideal, might be better than unemployment for some people.
Krugman supported Hillary Clinton in the 2016 U.S. presidential election.
U.S. Race Relations
Krugman has criticized the Republican Party for what he sees as using racial divisions to win elections. In his book Conscience of a Liberal, he argued that changes in race politics allowed a conservative movement to gain power, even though their policies often favored a small group of wealthy people over middle and lower-income Americans.
On Working in the Reagan Administration
Krugman worked for the Ronald Reagan administration from 1982 to 1983. He later said it was "strange" for him because he supports the welfare state, which he sees as a good social system. He found the experience "thrilling, then disillusioning" and realized he wasn't suited for a political role.
On Gordon Brown vs. David Cameron
Krugman believed that former British Prime Minister Gordon Brown and his party were unfairly blamed for the 2008 financial crisis. He praised Brown and urged British voters not to support the Conservative Party in the 2010 election, saying their leader, David Cameron, offered little beyond "fiscal panic."
On Donald Trump
Krugman has been a strong critic of Donald Trump and his presidencies. He often used his column in The New York Times to argue against Trump's policies on climate change, the economy, taxes, and foreign policy.
On the night of the 2016 election, Krugman incorrectly predicted that markets would never recover under Trump. He corrected this prediction three days later. Trump later gave him a "Fake News Award" for this.
Foreign Policy
In 2022, during the 2022 Russian invasion of Ukraine, Krugman described Russia as a "Potemkin superpower" (meaning it looked strong but wasn't). He argued that Russia's military performance was weaker than expected and that its economy was not as strong as it seemed, especially after international sanctions.
Krugman opposed the 2003 invasion of Iraq. He wrote that people should always be skeptical and not just trust authority, especially when "everyone" seems to support a policy.
Views on Technology
In 1998, during the "dot-com bubble" (when many internet companies were starting up), Krugman was skeptical about overly optimistic predictions for technology. He famously suggested that "By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's." He later said this prediction was meant to be "fun and provocative."
Krugman is a strong critic of Bitcoin, arguing against its economic value since 2011. He has called it a "bubble" and said there's no proof it's truly helpful for economic transactions.
In December 2022, Krugman predicted that generative AI (like ChatGPT) could replace many "knowledge jobs." He thought this technology would be good in the long run but warned that some people might lose their jobs or earn less in the short term.
Personal Life
Krugman has been married twice. His current wife is Robin Wells, who is also an economist. They have co-authored several economics textbooks. Krugman has stated that he and his wife do not have any children.
Krugman lives in New York City. When he retired from Princeton in 2015, he explained that he wanted to live in New York and focus more on public policy issues. He then became a professor at the City University of New York.
Published Works
Academic Books
- The Spatial Economy – Cities, Regions and International Trade (1999), with Masahisa Fujita and Anthony Venables.
- Development, Geography, and Economic Theory (1995).
- Currencies and Crises (1992).
- Geography and Trade (1991).
- Rethinking International Trade (1990).
- Trade Policy and Market Structure (1989), with Elhanan Helpman.
- Market Structure and Foreign Trade: Increasing Returns, Imperfect Competition, and the International Economy (1985), with Elhanan Helpman.
Economics Textbooks
- Economics, with Robin Wells (multiple editions, 2005-2021).
- Macroeconomics, with Robin Wells (2006).
- Microeconomics, with Robin Wells (2004).
- International Economics: Theory and Policy, with Maurice Obstfeld (multiple editions, 1998-2006).
Books for a General Audience
- Arguing with Zombies: Economics, Politics, and the Fight for a Better Future (2020).
- End This Depression Now! (2012).
- The Conscience of a Liberal (2007).
- The Great Unraveling: Losing Our Way in the New Century (2003).
- Fuzzy Math: The Essential Guide to the Bush Tax Plan (2001).
- The Return of Depression Economics and the Crisis of 2008 (2008).
- The Return of Depression Economics (1999).
- The Accidental Theorist and Other Dispatches from the Dismal Science (1998).
- Pop Internationalism (1996).
- Peddling Prosperity: Economic Sense and Nonsense in an Age of Diminished Expectations (1995).
- The Age of Diminished Expectations: U.S. Economic Policy in the 1990s (1990).
Images for kids
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This graph illustrates Krugman's 'core-periphery' model, showing how manufacturing might concentrate in certain regions.
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President George W. Bush with Nobel Prize winners in 2008, including Paul Krugman (left).
See also
In Spanish: Paul Krugman para niños
