IN a for-subscribers-only newsletter in the New York Times, Nobel Prize-winning economist Paul Krugman published on February 8, "When do we need new economic theories"? Alas, as it is subscribers only, I will summarize some points. Krugman writes how the Great Depression led most to become followers of Keynes. The stagflation of the 1970s led to a reassessment of this and the primacy of the policies of Milton Friedman and Edmund Phelps which were adopted by the right, led by Reagan and Thatcher. While the harsh recession resulting from Federal Reserve chairman Paul Volcker's high interest regime to choke inflation refuted those theories, it was the start, as Krugman points out, of denial by some ideologically driven members of the profession and that denial has lasted decades. Krugman then goes on to discuss the theories and arguments that developed since and are being developed given the challenges arising from 2008 and Covid. He refreshingly adds his thoughts on inflation while humbly admitting he was wrong on that. You are really secure and worthy of a Nobel Prize when you have the intellectual integrity to do that.

Washington Consensus

Premium + Digital Edition

Ad-free access


P 80 per month
(billed annually at P 960)
  • Unlimited ad-free access to website articles
  • Limited offer: Subscribe today and get digital edition access for free (accessible with up to 3 devices)

TRY FREE FOR 14 DAYS
See details
See details