October 14, 2008

Krugman Awarded Nobel Academic and Columnist Gets Economic Honor

By Catherine Rampell

Paul Krugman, a professor at Princeton University and an outspoken columnist for The New York Times and the International Herald Tribune, was awarded the Nobel Memorial Prize in Economic Sciences on Monday.

Krugman has been a polarizing figure on The Times's Op-Ed page, and a thorn in the side of President George W. Bush, for nearly a decade. The prize awarded Monday, however, was for academic - and less political - research on international trade and economic geography conducted primarily in the years before he became a columnist.

The prize committee praised Krugman for "having shown the effects of economies of scale on trade patterns and on the location of economic activity."

He has developed models that explain observed patterns of trade between countries, as well as what goods are produced where, and why. Traditional trade theory assumes that countries are different and will exchange only the different kinds of goods that they are comparatively better at producing; this model, however, was not reflected in the flow of goods and services that Krugman saw in the world around him. He set out to explain why worldwide trade was dominated by a few countries that are similar to each other and why a country might import the same kinds of goods that it exports.

"Krugman's trade models became the standard in the economics profession both because they fit the world a bit better and because they were masterpieces of mathematical modeling," said Edward Glaeser, a professor at Harvard University who also studied economic geography. "His models' combination of realism, elegance and tractability meant that they could provide the underpinnings for thousands of subsequent papers on trade, economic growth, political economy and especially economic geography."

Krugman is better known to many for his inflammatory and politically liberal pieces in The New York Times, which he has been writing since 1999. In recent years, in his column and a blog offshoot on nytimes.com, he has frequently and unrelentingly criticized Bush administration policies.

While he has earned a loyal fan base, a number of economists have attacked Krugman for politicizing his work.

"Much of his popular work is disgraceful," said Daniel Klein, a professor of economics at George Mason University who wrote a comprehensive review earlier this year of Krugman's body of columns in the Times. "He totally omits all these major issues where the economics conclusion goes against the feel-good Democratic Party ethos, which I think he's really tended to pander to, especially since writing for The New York Times."

Academics have also criticized Krugman for allegedly letting his political leanings distort his academic research, particularly in a paper he wrote for the Brookings Institution earlier this year in which he suggested that rising trade with poor countries might be depressing the wages of lower-income workers and increasing inequality in developed countries like the United States.

In an interview Monday, Krugman said he did not expect his award to have much affect on how colleagues and readers - whether they be fans or foes - regard him.

"For economists, this is a validation but not news. We know what each other have been up to," Krugman said. "For readers of the column, maybe they will read a little more carefully when I'm being economistic, or maybe have a little more tolerance when I'm being boring."

In 1991, Krugman received the John Bates Clark medal, a prize given every two years to "that economist under 40 who is adjudged to have made a significant contribution to economic knowledge." He follows several Clark medal recipients who have gone on to win a Nobel.

Krugman continues to teach at Princeton in New Jersey. This semester he is teaching a small graduate-level course on international monetary policy and theory, covering timely subjects like international liquidity crises. While the Nobel was officially given for Krugman's work on international trade theory, his dissertation, as well as much of his more recent academic work, was on international finance and international monetary theory.

The award given Monday, the last of the six prizes, is not one of the original Nobels. It was created in 1968 by the Swedish central bank in Alfred Nobel's memory.

Krugman was the sole winner of the award this year, which includes a prize of 10 million Swedish kronor, or $1.4 million.

Originally published by The New York Times Media Group.

(c) 2008 International Herald Tribune. Provided by ProQuest LLC. All rights Reserved.