Paul Krugman gets the prize for his work on International Trade and Economic Geography.
It is time I update this post. I have come across a lot of posts on Krugman, his work, criticism etc. Let me add my views and point to loads of interesting stuff.
I took note of Krugman for his work on Currency Crisis. His work on currency crisis and near perfect diagnosis and prediction of impending crisis in South East Asia was simply superb. I knew he is always in line for “The Prize” for his work on international trade but didn’t know much about it. The Nobel Prize Committee explains his work in this superb short note- information for public.
Reading Krugman is never easy. He doesn’t mince words and is a bit too straight forward. Economists disagree about everything but if you have Krugman not on your side, you have had it. He just rips you apart. If his getting the prize was a question of not whether but when, Krugman getting the criticism was not a question at all.
There are couple of criticisms. One, why did Krugman get the Prize alone (see this for a debate)? As it has been predicted for a long time now, if the Nobel Committee decides to award the prize for international trade it would go to the trio- Jagdish Bhagwati, Avinash Dixit and Paul Krugman.
Jagdish Bhagwati has been on the Nobel list for a long time and this has been acknowledged by many economists. He has been the lone crusader for free trade and for a long long time. Both Dixit and Krugman have moved to otehr areas but Bhagwati has stuck to trade. If someone has to get the prize for international trade, Bhagwati is at tops. Moreover, Bhagwati has been Krugman’s adviser and even published Krugman’s landmark 1979 paper – Increasing Returns, Monopolistic Competition, and International Trade. Krugamn’s model in this paper was largely based on Avinash Dixit and Joseph Stiglitz paper written in 1977 – Monopolistic Competition and Optimum Product Diversity.
Though both Bhagwati and Dixit have praised Krugman umpteen times (See this for Bhagwati’s praise and this for Dixit), I am sure they and others would be disappointed as well. Though, Rodrik in his post says he knew Krugman was the only one.
Actually, Bhagwati and Dixit should just ignore the Nobel Committee and carry on with their work (they have actually been doing the same). The selection for the prize is highly unknown. Sometimes, it is given to Economists for work done long long ago (On reading David Warsh’s Economic Principals one realises that 1989 winner Trygve Haavelmo had taken more keenly to fishing than economics, similarly work by Nash and Mundell was done in their early 20’s ). Sometimes it is given to economists who are too old (William Vickrey, Leonid Hurwicz) and the prize money is useless for them. Sometimes the award is given too late and one of the main founder of the area of work is no more. It is ridiculous to imagine no Fisher Black in the prize for option pricing model, no Amos Tversky for his work on behavioral economics etc).
Another criticism is that people feel Krugman as an economist is dead (thanks to Neeraj for the pointer; see this as well; this as well). They say Krugman is no more an economist but a political columnist and has done little in past 10 years. Samuelson in a light humor before the prize, saidhe was more disappointed with Pulitzer committee than Nobel Committee for not honoring Krugman. Quite a few Economists write a column in newspapers and magazines but they don’t give up economic research. Krugman did the opposite and hence the treatment. Dixit in his recent piece in Voxeu.org, defends Krugman and says the prize is for economics not polemics :-) . Actually, I don’t understand this criticism at all. Though, Nobel Committee recognises Krugman’s columns and his blog, the prize is above all for his work in economics.
Some material worth reading:
- Krugman explains his work (it doesn’t get simpler than this)
- Krugman’s great papers – 1980 paper (on international trade) and 1991 paper (on Economic Geography); I haven’t come across any public copy of his most famous 1979 paper. (Update: Here is his 1979 paper on international trade and increasing returns)
- Krugman’s MIT page
- Krugman’s unofficial website
- Tyler Cowen (lots of stuff in this post)
- Alex Tabarrok
- Princeton University Press Release
- NY Times article
- Ed Glaesar
- Dani Rodrik