|This section requires expansion.|
Krugman identifies as a Keynesian and a saltwater economist, and he has criticized the freshwater school on macroeconomics. Though he applies New Keynesian theory in some of his work, he has also criticized it for lacking predictive power and for hewing to ideas like the efficient-market hypothesis and rational expectations. Since the 1990s, he has promoted the IS-LM model as invented by John Hicks, pointing out its relative simplicity compared to New Keynesianism and continued currency in practical economic policy.
In the wake of the 2007-2009 financial crisis he has remarked that he is "gravitating towards a Keynes-Fisher-Minsky view of macroeconomics." Post-Keynesian observers cite commonalities between Krugman's views and those of the Post-Keynesian school. In recent academic work, he has collaborated with Gauti Eggertsson on a New Keynesian model of debt-overhang and debt-driven slumps, inspired by the writings of Irving Fisher, Hyman Minsky, and Richard Koo. Their work argues that during a debt-driven slump, the "paradox of toil", together with the paradox of flexibility, can exacerbate a liquidity trap, reducing demand and employment.
Read more about this topic: Paul Krugman
Famous quotes containing the words economic and/or views:
“The chief reason warfare is still with us is neither a secret death-wish of the human species, nor an irrepressible instinct of aggression, nor, finally and more plausibly, the serious economic and social dangers inherent in disarmament, but the simple fact that no substitute for this final arbiter in international affairs has yet appeared on the political scene.”
—Hannah Arendt (19061975)
“Political correctness is the natural continuum from the party line. What we are seeing once again is a self-appointed group of vigilantes imposing their views on others. It is a heritage of communism, but they dont seem to see this.”
—Doris Lessing (b. 1919)