Kitchens krugman theory

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krugman trade theory

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Kitchens krugman theory

  1. 1. Paul Krugman for The Noble Peace Prize By Kaitlin Kitchens
  2. 2. About Krugman  B.A. from Yale University  Former professor at MIT, Stanford, & Princeton  Austerias Award  John Clark Bate Medal  He’s published 23 books & over 200 articles  He’s a writer for many popular publications.
  3. 3. Krugman’s Economic Theory in 5 Steps 1. The money you spend goes towards my income, and the money I spend goes towards your income. 2. More people are starting to spend less money, depressing the economy, making more people have fewer jobs. 3. The government should be spending more to increase jobs and decrease the unemployment rate. 4. Budget deficits haven’t lead to increased interest rates, austerity rates are deepening our economy. 5. Spending cuts should wait until the US is no longer in economic trouble. The private sector is willing to pay money to decrease the unemployment rate.
  4. 4. Krugman’s Theory  Although some may argue that “The New Trade Theory” was not anything different, (I mean all he did was put together data showing the increase of returns to scale in different nations), Krugman was unique because he brought a whole new aspect to his data.  Krugman used mathematical economics to model the increasing returns to scale.  He argued that the creation of important industries were path dependent by the “network effect”.
  5. 5. Krugman’s Theory  The theory was highly technical.  His idea said that when markets are not perfectly competitive, the trade can become altered.  He emphasized trading with countries in similar size and keeping the economy flowing. His theory allows the US government to hopefully not fall apart because of trade.  Essentially, the government can play a crucial role when the markets are not perfectly competitive.  4 Theories involving imperfect competition, 1. Price 2. Repetition 3. Cost 4. Externalities
  6. 6. sources  http://www.nobelprize.org/nobel_prizes/economi c-sciences/laureates/2008/krugman-facts.html  http://en.wikipedia.org/wiki/New_trade_theory  http://www.ft.com/intl/cms/s/0/ff502a74-9989- 11dd-9d48-000077b07658.html

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