Paul Krugman: Economy

Paul Krugman is American economist. Explore interesting quotes on economy.
Paul Krugman: 212   quotes 1   like

“There was a limited literature on external economies and international trade before 1978. It was never, however, very influential, because it seemed terminally messy; even the simplest models became bogged down in a taxonomy of possible outcomes. What has since become clear is that this messiness arose in large part because the modelers were asking their models to do what traditional trade models do, which is to predict a precise pattern of specialization and trade.”

Paul Krugman

How I Work (1993)

Literature , Parting

“When the economy is in a depression, scarcity ceases to rule. Productive resources sit idle, so that it is possible to have more of some things without having less of others; free lunches are all around. As a result, all the usual rules of economics are stood on their head; we enter a looking-glass world in which virtue is vice and prudence is folly. Thrift hurts our future prospects; sound money makes us poorer. Moreover, that's the kind of world we have been living in for the past several years, which means that it is a kind of world that students should understand. […] Depression economics is marked by paradoxes, in which seemingly virtuous actions have perverse, harmful effects. Two paradoxes in particular stand out: the paradox of thrift, in which the attempt to save more actually leads to the nation as a whole saving less, and the less-well-known paradox of flexibility, in which the willingness of workers to protect their jobs by accepting lower wages actually reduces total employment. […] In times of depression, the rules are different. Conventionally sound policy – balanced budgets, a firm commitment to price stability – helps to keep the economy depressed. Once again, this is not normal. Most of the time we are not in a depression. But sometimes we are – and 2013, when this chapter was written, was one of those times.”

Paul Krugman

“Depressions are Different”, in Robert M. Solow, ed. Economics for the Curious: Inside the Minds of 12 Nobel Laureates. 2014.

Money , World , Understanding , Time

“So you can take your pick as to which Mundell you prefer; but the Nobel committee basically honored Mundell the younger, the economist who was iconoclastic enough to imagine that Canada, of all places, was the economy of the future--and was right.”

Paul Krugman

"O Canada", Slate (October 19, 1999)

Imagination , Future

“I would summarize the Keynesian view in terms of four points:1. Economies sometimes produce much less than they could, and employ many fewer workers than they should, because there just isn’t enough spending. Such episodes can happen for a variety of reasons; the question is how to respond.
2. There are normally forces that tend to push the economy back toward full employment. But they work slowly; a hands-off policy toward depressed economies means accepting a long, unnecessary period of pain.
3. It is often possible to drastically shorten this period of pain and greatly reduce the human and financial losses by “printing money”, using the central bank’s power of currency creation to push interest rates down.
4. Sometimes, however, monetary policy loses its effectiveness, especially when rates are close to zero. In that case temporary deficit spending can provide a useful boost. And conversely, fiscal austerity in a depressed economy imposes large economic losses.”

Paul Krugman

Keynesianism Explained http://krugman.blogs.nytimes.com/2015/09/15/keynesianism-explained (September 15, 2015)
The Conscience of a Liberal blog

Money , Pain , Question , Loss

“Economics is harder than physics; luckily it is not quite as hard as sociology. Why is economics such a hard subject? Part of the answer has to do with complexity. The economy cannot be put in a box. […] Another reason economics is hard is that the critical sociologist is right: it involves human beings, who do not behave in simple, mechanical ways.”

Paul Krugman book Peddling Prosperity

Preface
Peddling Prosperity (1994)

Way , Parting , Box

“So let's start telling the truth: competitiveness is a meaningless word when applied to national economies. And the obsession with competitiveness is both wrong and dangerous.”

Paul Krugman

Pop Internationalism (1996), Competitiveness: A Dangerous Obsession (1994)

Truth

“We’re now in the seventh year of a slump brought on by Wall Street excess; the wizardly job of “allocating the economy’s investment resources” consisted, we now know, largely of funneling money into a real estate bubble.”

Paul Krugman

"Iron Men of Wall Street" http://krugman.blogs.nytimes.com/2014/02/16/iron-men-of-wall-street/, 16 February 2014
The Conscience of a Liberal blog

Money

“Whether the influence of increasing returns on trade and geography is rising or falling, one thing is clear: much was learned from the intellectual revolution that brought increasing returns into the heart of how we think about the world economy. It wasn't just that economists could make sense of previously puzzling data, we found ourselves able to see things that had previously been in an intellectual blind spot. Many people contributed to this process of enlightenment; I'm proud to have been a part of the journey.”

Paul Krugman

"The Increasing Returns Revolution in Trade and Geography", The American Economic Review (Jun., 2009)

People , World , Thinking , Sense

“There are three kinds of writing in economics: Greek-letter, up-and-down, and airport. Greek-letter writing formal, theoretical, mathematical is how professors communicate. Like any academic field, economics has its fair share of hacks and phonies, who use complicated language to hide the banality of their ideas; it also contains profound thinkers, who use the specialized language of the discipline as an efficient way to express deep insights. […] Up-and-down economics is what one encounters on the business pages of newspapers, or for that matter on TV. It is preoccupied with the latest news and the latest numbers, hence its name. […] Finally, airport economics is the language of economics bestsellers. These books are most prominently displayed at airport bookstores, where the delayed business traveler is likely to buy them. Most of these books predict disaster: a new great depression, the evisceration of our economy by Japanese multinationals, the collapse of our money. A minority have the opposite view, a boundless optimism: new technology or supply-side economics is about to lead us into an era of unprecedented economic progress. Whether pessimistic or optimistic, airport economics is usually fun, rarely well informed, and never serious.”

Paul Krugman

Preface
The Age of Diminished Expectations (1990; 1994; 1997)

Money , Books , Way , Travel

“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.”

Paul Krugman

"Why most economists' predictions are wrong" http://web.archive.org/web/19980610100009/www.redherring.com/mag/issue55/economics.html, The Red Herring, June 1998

“The world is full of self-organizing systems, systems that form structures not merely in response to inputs from outside but also, indeed primarily, in response to their own internal logic. Global weather is a self-organizing system; so, surely, is the global economy.”

Paul Krugman

Source: The Self-Organizing Economy (1996), Chapter 9. Concluding Thoughts

World , Weather

“First, most of the speculation about the superiority of the communist system - including the popular view that Western economies could painlessly accelerate their own growth by borrowing some aspects of that system - was off base. Rapid Soviet economic growth was based entirely on one attribute: the willingness to save, to sacrifice current consumption for the sake of future production. The communist example offered no hint of a free lunch.
Second, the economic analysis of communist countries' growth implied some future limits to their industrial expansion - in other words, implied that a naive projection of their past growth rates into the future was likely to greatly overstate their real prospects. Economic growth that is based on expansion of inputs, rather than on growth in output per unit of input, is inevitably subject to diminishing returns. It was simply not possible for the Soviet economies to sustain the rates of growth of labor force participation, average education levels, and above all the physical capital stock that had prevailed in previous years. Communist growth would predictably slow down, perhaps drastically.”

Paul Krugman

Pop Internationalism (1996), Asia's Miracle (1994)

Education , Past , Future , Country

“If growth in East Asia is indeed running into diminishing returns, however, the conventional wisdom about an Asian-centered world economy needs some rethinking.”

Paul Krugman

Pop Internationalism (1996), Asia's Miracle (1994)

Wisdom , World

“Now I’m not saying that Keynes was right about everything, that we should treat The General Theory as a sort of secular bible - the way that Marxists treat Das Kapital. But the essential truth of Keynes’s big idea - that even the most productive economy can fail if consumers and investors spend too little, that the pursuit of sound money and balanced budgets is sometimes (not always!) folly rather than wisdom - is as evident in today’s world as it was in the 1930s. And in these dangerous days, we ignore or reject that idea at the world economy’s peril.”

Paul Krugman

"Why aren't we all Keynesians yet?", Fortune (Aug. 3, 1998)

Wisdom , Money , Truth , World

“The kind of economic trouble that Asia experienced a decade ago, and that we're all experiencing now, is precisely the sort of thing we thought we had learned to prevent. In the bad old days big, advanced economies with stable governments-like Britain in the 1920s-might have had no answer to prolonged periods of stagnation and deflation; but between John Maynard Keynes and Milton Friedman, we thought we knew enough to keep that from happening again.”

Paul Krugman

Introduction
The Return of Depression Economics and The Crisis of 2008 (2009)

Learning

“The usual and basic Keynesian answer to recessions is a monetary expansion. But Keynes worried that even this might sometimes not be enough, particularly if a recession had been allowed to get out of hand and become a true depression. Once the economy is deeply depressed, households and especially firms may be unwilling to increase spending no matter how much cash they have, they may simply add any monetary expansion to their board. Such a situation, in which monetary policy has become ineffective, has come to be known as a "liquidity trap"; Keynes believed that the British and American economies had entered such a trap by the mid-1930s, and some economists believed that the United States was on the edge of such a tap in 1992.
The Keynesian answer to a liquidity trap is for the government to do what the private sector will not: spend. When monetary expansion is ineffective, fiscal expansion—such as public works programs financed by borrowing—must take its place. Such a fiscal expansion can break the vicious circle of low spending and low incomes, "priming the pump: and getting the economy moving again. But remember that this is not by any means an all-purpose policy recommendation; it is essentially a strategy of desperation, a dangerous drug to be prescribed only when the usual over-the-counter remedy of monetary policy has failed.”

Paul Krugman book Peddling Prosperity

Source: Peddling Prosperity (1994), Ch. 1 : The Attack on Keynes

“What saved the economy, and the New Deal was the enormous public-works project known as World War II, which finally provided a fiscal stimulus adequate to the economy's needs.”

Paul Krugman

Op-ed, "Franklin Delano Obama," New York Times, November 10, 2008 http://www.nytimes.com/2008/11/10/opinion/10krugman.html
The New York Times Columns

War , World

“More than four years after the financial crisis began, the world's major advanced economies remain deeply depressed, in a scene all too reminiscent of the 1930s. And the reason is simple: we are relying on the same ideas that governed policy in the 1930s. These ideas, long since disproved, involve profound errors both about the causes of the crisis, its nature, and the appropriate response.These errors have taken deep root in public consciousness and provide the public support for the excessive austerity of current fiscal policies in many countries. So the time is ripe for a Manifesto in which mainstream economists offer the public a more evidence-based analysis of our problems.”

Paul Krugman

Paul Krugman and Richard Layard, "A Manifesto for Economic Sense" (June 27, 2012)

World , Error , Idea , Support

“In this book I try to show how models of self-organization can be applied to many economic phenomena - how the principle of "order from instability," which explains the growth of hurricanes and embryos, can also explain the formation of cities and business cycles; how the principle of "order from random growth" can explain the strangely simple rules that describe the sizes of earth quakes, meteorites, and metropolitan areas. I believe that the ideas of self-organization theory can add substantially to our understanding of the economy; whatever their ultimate usefulness, these ideas are very exciting, and playing around with them is tremendous fun.”

Paul Krugman

Preface
The Self-Organizing Economy (1996)

Books , Idea , Understanding , Business

“Will the tax cut destroy America’s prosperity? Probably not. As Adam Smith observed, there’s a deal of ruin in a nation. We have a huge, resilient economy that can survive and recover from even quite bad government policies.
Yet while the tax cut may not be a matter of economic life or death, it is a very serious issue. For one thing, like it or not, the tax cut has become the central political issue in the United States right now. Conservatives who want to reshape America view passage of a large tax cut as a first step toward realizing their vision. For that reason, those who do not share this vision feel, rightly, that they must oppose the plan.”

Paul Krugman

Introduction
Fuzzy Math: The Essential Guide to the Bush Tax Plan (2001)

Life , Death , Feeling