Krugman why i am an economist

I see young people around the world doing an excellent job in economic research and the joy of seeing that progress never goes away. Thank you for honoring my work and I know that in the future you will find many people to recognize and that little by little we will build a better world, "he said.

Paul Krugman received the Nobel Prize in Economic Sciences at , when he was a professor at Princeton University, for his contributions to international economic theory. The second honorary doctorate of the INTEC was awarded to the renowned American linguist Noam Chomsky founder of generative and transformational grammar, in Humanities; the third, in Sciences, fell on the outstanding Dominican physicist, Doctor in Electro-Physics, Erich Kunhardt , who registered some 14 patents in the United States.

He earned a bachelor's degree in Economics from Yale University in the year of , and at the 24 years of age he obtained a Doctor of Economics degree from the prestigious Massachusetts Institute of Technology MIT. On the other side of the Atlantic, at the prestigious London School of Economics, he was appointed Centennial Professor. His career is not limited to academic and university.

Between and he also worked for the government of his country as Senior International Economist of the President's Council of Economic Advisers.

The most important academic contributions of Professor Krugman are concentrated in two areas: international trade and economic geography: In the first, he helped to understand the patterns of trade in contexts of imperfect competition, that is, in concentrated markets dominated by few companies that interact strategically and in which economies of scale prevail.

In economic geography helped to clarify the dynamics and forces behind the intense spatial concentration of economic activity that is observed globally, particularly in urban poles, along with the marginalization of many other territories. With this, together with others, it inaugurated what is known as the new economic geography.

The contributions of Professor Krugman have earned him the most notable international recognition. We just don't see what we can't formalize. And the biggest blind spot of all has involved increasing returns. So there, right at hand, was my mission: to look at things from a slightly different angle, and in so doing to reveal the obvious, things that had been right under our noses all the time.

The models I wrote down that winter and spring were incomplete, if one demanded of them that they specify exactly who produced what.

And yet they told meaningful stories. It took me a long time to express clearly what I was doing, but eventually I realized that one way to deal with a difficult problem is to change the question -- in particular by shifting levels. A detailed analysis may be extremely nasty, yet an aggregative or systemic description that is far easier may tell you all you need to know. To get this system or aggregate level description required, of course, accepting the basically silly assumptions of symmetry that underlay the Dixit-Stiglitz and related models.

Yet these silly assumptions seemed to let me tell stories that were persuasive, and that could not be told using the hallowed assumptions of the standard competitive model.

What I began to realize was that in economics we are always making silly assumptions; it's just that some of them have been made so often that they come to seem natural. And so one should not reject a model as silly until one sees where its assumptions lead. Finally, the simplicity of the models may have frustrated my lingering urge to show off the technical skills I had so laboriously acquired in graduate school, but was, I soon realized, central to the enterprise. Trade theorists had failed to address the role of increasing returns, not out of empirical conviction, but because they thought it was too hard to model.

How much more effective, then, to show that it could be almost childishly simple? And so, before my 25th birthday, I basically knew what I was going to do with my professional life. I don't know what would have happened if my grand project had met with rejection from other economists -- perhaps I would have turned cranky, perhaps I would have lost faith and abandoned the effort.

But in fact all went astonishingly well. In my own mind, the curve of my core research since that January of has followed a remarkably consistent path. Within a few months, I had written up a basic monopolistic competition trade model -- as it turned out, simultaneously and independently with similar models by Avinash Dixit and Victor Norman, on one side, and Kelvin Lancaster, on the other. I had some trouble getting that paper published -- receiving the dismissive rejection by a flagship journal the QJE that seems to be the fate of every innovation in economics -- but pressed on.

From to roughly the end of I focussed virtually all my research energies on the role of increasing returns and imperfect competition in international trade. I took one year off to work in the US government; but more about that below. What had been a personal quest turned into a movement, as others followed the same path. Above all, Elhanan Helpman -- a deep thinker whose integrity and self-discipline were useful counterparts to my own flakiness and disorganization -- first made crucial contibutions himself, then talked me into collaborative work.

Our magnum opus, Market Structure and Foreign Trade, served the purpose of making our ideas not only respectable but almost standard: iconoclasm to orthodoxy in seven years. For whatever reason, I allowed my grand project on increasing returns to lie fallow for a few years in the s, and turned my attention to international finance. My work in this area consisted primarily of small models inspired by current policy issues; although these models lacked the integrating theme of my trade models, I think that my finance work is to some extent unified by its intellectual style, which is very similar to that of my work on trade.

In I returned to the economics of increasing returns from a new direction. I suddenly realized that the techniques that had allowed us to legitimize the role of increasing returns in trade could also be used to reclaim a whole outcast field: that of economic geography, the location of activity in space.

Here, perhaps even more than in trade, was a field full of empirical insights, good stories, and obvious practical importance, lying neglected right under our noses because nobody had seen a good way to formalize it. For me, it was like reliving the best moments of my intellectual childhood. Doing geography is hard work; it requires a lot of hard thinking to make the models look trivial, and I am increasingly finding that I need the computer as an aid not just to data analysis but even to theorizing.

Yet it is immensely rewarding. For me, the biggest thrill in theory is the moment when your model tells you something that should have been obvious all along, something that you can immediately relate to what you know about the world, and yet which you didn't really appreciate. Geography still has that thrill. My work on geography seems, at the time of writing, to be leading me even further afield.

In particular, there are obvious affinities between the concepts that arise naturally in geographic models and the language of traditional development economics -- the "high development theory" that flourished in the s and 50s, then collapsed.

So I expect that my basic research project will continue to widen in scope. In the course of describing my formative moment in , I have already implicitly given my four basic rules for research. Let me now state them explicitly, then explain. Here are the rules:. What I mean by this rule is "Pay attention to what intelligent people are saying, even if they do not have your customs or speak your analytical language.

When I began my rethinking of international trade, there was already a sizeable literature criticizing conventional trade theory. Empiricists pointed out that trade took place largely between countries with seemingly similar factor endowments, and that much of this trade involved intra-industry exchanges of seemingly similar products.

Acute observers pointed to the importance of economies of scale and imperfect competition in actual international markets. Yet all of this intelligent commentary was ignored by mainstream trade theorists -- after all, their critics often seemed to have an imperfect understanding of comparative advantage, and had no coherent models of their own to offer; so why pay attention to them? The result was that the profession overlooked evidence and stories that were right under its nose.

The same story is repeated in geography. Geographers and regional scientists have amassed a great deal of evidence on the nature and importance of localized external economies, and organized that evidence intelligently if not rigorously.

Yet economists have ignored what they had to say, because it comes from people speaking the wrong language. I do not mean to say that formal economic analysis is worthless, and that anybody's opinion on economic matters is as good as anyone else's. On the contrary! I am a strong believer in the importance of models, which are to our minds what spear-throwers were to stone age arms: they greatly extend the power and range of our insight. In particular, I have no sympathy for those people who criticize the unrealistic simplifications of model-builders, and imagine that they achieve greater sophistication by avoiding stating their assumptions clearly.

The point is to realize that economic models are metaphors, not truth. By all means express your thoughts in models, as pretty as possible more on that below. But always remember that you may have gotten the metaphor wrong, and that someone else with a different metaphor may be seeing something that you are missing. There was a limited literature on external economies and international trade before 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. Yet why ask that particular question? Even in the Heckscher-Ohlin model, the point you want to make is something like "A country tends to export goods whose production is intensive in the factors in which that country is abundant"; if your specific model tells you that capital-abundant country Home exports capital-intensive good X, this is valuable because it sharpens your understanding of that insight, not because you really care about these particular details of a patently oversimplified model.

It turns out that if you don't ask for the kind of detail that you get in the two-sector, two-good classical model, an external economy model needn't be at all messy.

As long as you ask "system" questions like how welfare and world income are distributed, it is possible to make very simple and neat models. And it's really these system questions that we are interested in. The focus on excessive detail was, to put it bluntly, a matter of carrying over ingrained prejudices from an overworked model into a domain where they only made life harder. The same is true in a number of areas in which I have worked. In general, if people in a field have bogged down on questions that seem very hard, it is a good idea to ask whether they are really working on the right questions.

Often some other question is not only easier to answer but actually more interesting! One drawback of this trick is that it often gets people angry. An academic who has spent years on a hard problem is rarely grateful when you suggest that his field can be revived by bypassing it. If you want to publish a paper in economic theory, there is a safe approach: make a conceptually minor but mathematically difficult extension to some familiar model.

Because the basic assumptions of the model are already familiar, people will not regard them as strange; because you have done something technically difficult, you will be respected for your demonstration of firepower.

Unfortunately, you will not have added much to human knowledge. What I found myself doing in the new trade theory was pretty much the opposite. I found myself using assumptions that were unfamiliar, and doing very simple things with them. Doing this requires a lot of self-confidence, because initially people especially referees are almost certain not simply to criticize your work but to ridicule it. After all, your assumptions will surely look peculiar: a continuum of goods all with identical production functions, entering symmetrically into utility?

Countries of identical economic size, with mirror-image factor endowments? Why, people will ask, should they be interested in a model with such silly assumptions -- especially when there are evidently much smarter young people who demonstrate their quality by solving hard problems?

What seems terribly hard for many economists to accept is that all our models involve silly assumptions. Given what we know about cognitive psychology, utility maximization is a ludicrous concept; equilibrium pretty foolish outside of financial markets; perfect competition a howler for most industries.

The reason for making these assumptions is not that they are reasonable but that they seem to help us produce models that are helpful metaphors for things that we think happen in the real world. Consider the example which some economists seem to think is not simply a useful model but revealed divine truth: the Arrow-Debreu model of perfect competition with utility maximization and complete markets. This is indeed a wonderful model -- not because its assumptions are remotely plausible but because it helps us think more clearly about both the nature of economic efficiency and the prospects for achieving efficiency under a market system.

It is actually a piece of inspired, marvellous silliness. What I believe is that the age of creative silliness is not past. Virtue, as an economic theorist, does not consist in squeezing the last drop of blood out of assumptions that have come to seem natural because they have been used in a few hundred earlier papers.

If a new set of assumptions seems to yield a valuable set of insights, then never mind if they seem strange.

The injunction to dare to be silly is not a license to be undisciplined. In fact, doing really innovative theory requires much more intellectual discipline than working in a well-established literature.

What is really hard is to stay on course: since the terrain is unfamilar, it is all too easy to find yourself going around in circles. Somewhere or other Keynes wrote that "it is astonishing what foolish things a man thinking alone can come temporarily to believe".

And it is also crucial to express your ideas in a way that other people, who have not spent the last few years wrestling with your problems and are not eager to spend the next few years wrestling with your answers, can understand without too much effort. Fortunately, there is a strategy that does double duty: it both helps you keep control of your own insights, and makes those insights accessible to others.

The strategy is: always try to express your ideas in the simplest possible model. The act of stripping down to this minimalist model will force you to get to the essence of what you are trying to say and will also make obvious to you those situations in which you actually have nothing to say.

And this minimalist model will then be easy to explain to other economists as well. I have used the "minimum necessary model" approach over and over again: using a one-factor, one-industry model to explain the basic role of monopolistic competition in trade; assuming sector-specific labor rather than full Heckscher-Ohlin factor substitution to explain the effects of intraindustry trade; working with symmetric countries to assess the role of reciprocal dumping; and so on.