Paul Krugman

Paul Krugman
Princeton Professor and New York Times columnist Paul Krugman smiles during a press conference to announce his winning the Nobel Prize October 13, 2008 in Princeton, New Jersey. Krugman was given the prestigious award, which includes a prize of $1.4 million for his work on economic trade theory. Photo by Jeff Zelevansky/Getty Images

Who Is Paul Krugman?

Paul Krugman is a controversial and influential economics columnist for The New York Times. He is a professor in the Ph.D. program at The Graduate Center, City University of New York. He is also a distinguished scholar at the Luxembourg Income Study Center where he focuses on inequality research. (Source: City University of New York)

Blog

Paul Krugman writes "The Conscience of a Liberal" twice a week.

It is one of the most-quoted and widely-referred-to blogs in the industry.

In 2015, Krugman argued that too much debt did not cause the Greece debt crisis. Instead, he said, Greece ran into trouble because it was a member of the eurozone. Most countries with too much debt cut spending but also devalue their currencies to boost exports. Since Greece couldn't do this, it was forced to accept austerity measures that hurt its growth potential. The German Finance Minister, Wolfgang Schauble, criticized Krugman's knowledge of how the eurozone worked. (Source: "Greece's Economy Is a Lesson for Republicans," NYT, July 10, 2015. "Who's Winning on Greece: Krugman or Germany?," CNBC, July 20, 2015)

In early 2010, Krugman wrongly predicted there was a 40% chance the economy was headed for a double-dip recession by the second half of the year. He based this prediction on the tightening monetary and fiscal policy.

He thought that the Fed's exit plan combined with the end of stimulus spending would reverse the shaky economic recovery. Fortunately, he wasn't right on this one. In fact, the economy grew 2.5% in the third quarter, and 2.3% in the fourth quarter. (See GDP Current Statistics)

In 2008, he correctly predicted that failing banks would rapidly contaminate their global partners.

Everyone else, including Federal Reserve Chairman Ben Bernanke, thought the crisis would affect only the United States. Within days of announcing his theory in his blog, it was widely discussed.

Krugman's popularity is due to his direct writing style, his credentials, and his innovative thinking.

Nobel Prize

Krugman won the Nobel Memorial Prize in Economic Sciences in 2008 for his formulating "New Trade Theory."  It explains why countries (like Sweden) with a large domestic market for a product, (like a Volvo) develop a comparative advantage in that product. That helps them become a leading exporter of that product to similar countries (like the United States). 

That led to a second theory. It says the trading areas with large domestic markets and exports will attract even more business. That's why production is concentrated in just a few, large countries. The cities within those countries become densely populated, attracting workers and consumers. That makes those countries even more successful.

Krugman's Early Career

Krugman was a professor of economics and international affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University from 2000 to 2015.

He was a Professor of Economics at MIT from 1979 until 2000. He also taught at Yale and Stanford. He worked on the White House Council of Economic Advisers in 1982 and 1983.

In 1991, he received the John Bates Clark Medal. This award is given every two years to an economist under 40 by the American Economic Association.

Krugman received a Ph.D. in economics from MIT in 1977.  So did Fed Chair Bernanke, European Central Bank President Mario Draghi, and International Monetary Fund chief economist Olivier Blanchard. In 2015, Blanchard was replaced by MIT grad  Maurice Obstfeld. He was taught by Fed Vice-Chairman (and former head of Israel's central bank) Stanley Fischer.

In the 1970s, they were taught that government intervention was needed to get the economy out of recession. That was a time when most economists argued that too much government intervention caused stagflation.

However, Bernanke and others stuck to their training during the 2008 financial crisis. They proved that massive intervention was needed to restore confidence.  Krugman received a B.A. from Yale University in 1974.  (Source: The M.I.T. Gang, New York Times, July 24, 2015)

Krugman is the author or editor of 20 books, including the textbooks Economics, Macroeconomics, and Microeconomics. He also wrote The Return of Depression Economics and the Crisis of 2008, The Age of Diminished Expectation, and The Conscience of a Liberal.