Paul Krugman
Paul Robin Krugman is an American economist who is the Distinguished Professor of Economics at the Graduate Center of the City University of New York. He was a columnist for The New York Times from 2000 to 2024. In 2008, Krugman was the sole winner of 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 from where he retired in June 2015, holding the title of professor emeritus there. He also holds the title of Centennial 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. He is known in academia for his work on international economics, 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 more than 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. According to the Open Syllabus Project, Krugman is the second most frequently cited author on college syllabi for economics courses. 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 praise and criticism.
On December 6, 2024, New York Times opinion editor Kathleen Kingsbury announced that Krugman was retiring as a Times columnist; His final column, titled 'Finding Hope in an Age of Resentment,' was published on December 9, 2024. Afterwards, Krugman began publishing a daily newsletter on Substack. The newsletter, titled "Paul Krugman," publishes most content for free while offering some exclusive items to paid subscribers. Krugman's wife, economist Robin Wells, serves as his editor for the newsletter. By mid-2025, the newsletter was reaching 350,000-450,000 readers per post. Krugman wrote there that he left the Times because his editors began to discourage him from writing columns that might "get some people riled up."
Early life and education
Krugman was born to a Ukrainian Jewish family, the son of Anita and David Krugman. In 1914, his maternal grandparents immigrated to the United States from Ukraine, while in 1920, his paternal grandparents arrived from Belarus. He was born in Albany, New York, spent several years of his childhood in the upstate city of Utica, before growing up from age eight in Merrick, a hamlet in Nassau County, Long Island. 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.In 1974, Krugman earned his BA summa cum laude in economics from Yale University, where he was a National Merit Scholar. He then went on to pursue a PhD in economics from Massachusetts Institute of Technology. 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, " 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".
Academic career
Krugman became an assistant professor at Yale University in September 1977. He joined the faculty at 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 and the London School of Economics.In 2000, Krugman joined Princeton University as Professor of Economics and International Affairs, where he remained until June 2015. 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."
New trade theory
Prior to Krugman's work, trade theory 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.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.