Paul Krugman (b. 1953)
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Who They Were
Paul Krugman (born 1953) is an American economist recognised for reshaping how economists explain international trade and the location of economic activity. From the late 1970s he developed models that accounted for patterns older theories struggled with, and his work placed him among the leading trade theorists of his generation, in a lineage running from David Ricardo through Heckscher, Ohlin and Paul Samuelson. He has held positions at institutions including MIT and Princeton, and he is also widely known as a newspaper columnist and public commentator on economic policy. In 2008 he received the Nobel Memorial Prize in Economic Sciences for his analysis of trade patterns and location of economic activity, the year after Leonid Hurwicz, Eric Maskin and Roger Myerson were honoured for mechanism design theory. He remains one of the most visible economists in public life.
Key Contributions
Krugman's central contribution is new trade theory. Traditional theory explained trade through differences in national endowments: countries export what they are relatively well suited to produce. But from the late 1970s Krugman showed that much trade occurs between similar rich countries and reflects economies of scale and consumers' preference for variety rather than differences in endowments. His models explain, for instance, why Germany and France trade cars with each other rather than one specialising entirely. He extended this thinking into economic geography, analysing why economic activity clusters in particular regions and cities, as firms and workers gain from locating near one another. Together this work accounts for the concentration of production and the large volume of trade among comparable economies. He received the Nobel Memorial Prize in 2008 for his analysis of trade patterns and the location of economic activity.
On EconRecall
American economist and 2008 Nobel laureate known for new trade theory and economic geography, and a prominent public commentator. Play the games that feature Paul Krugman: