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Tuesday, October 14, 2008

Because this is an economics blog...

I have to serve up the requisite post about Paul Krugman being awarded the Prize in Economic Sciences in Memory of Alfred Nobel (note that there isn't technically a 'Nobel Prize' in economics - it was established after the others). The award might surprise many non-economists who only know Krugman for his somewhat liberal op-ed column in the New York Times but politics aside, Krugman is widely known in the profession for his work on 'new trade theory'. I'm not a macro person so my grasp on his work is somewhat dim but The Financial Times sums it up nicely:
Earlier trade theories suggested that a country would trade with partners that were different – rich would trade with poor, and capital-intensive would trade with labour-intensive. In practice, rich countries tend to trade with other rich countries. Mr Krugman’s analysis showed why this was to be expected: many products were most efficiently produced by large companies, but consumers wanted variety and would buy products from foreign giants as well as the dominant domestic corporations.
There's been so much written about him in the last 24 hours, by people far better qualified than I, that I really don't have much to add but here are a few of my favorite bits:

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