Currencies and Crises

by Paul Krugman

This new collection revolves around Krugman's work on international monetary economics from the late 1970s to the present in an effort to make sense of a turbulent period that "involved one surprise after another, most of them unpleasant." Paul Krugman's first collection of essays, Rethinking International Trade, mounted a spirited assault on established trade theory and proposed an alternative approach to account for increasing returns and imperfect competition. Less theoretical and more embedded in real-world experience, this new collection revolves around Krugman's work on international monetary economics from the late 1970s to the present in an effort to make sense of a turbulent period that "involved one surprise after another, most of them unpleasant." The eleven essays cover such key areas as the role of exchange rates in balance-of-payments adjustment policy, the role of speculation in the functioning of exchange rate regimes, Third World debt, and the construction of an international monetary system. They are unified by the same basic methodology and style the construction of a small theoretical model in order to simplify or clarify a puzzling or difficult world monetary problem.

Genres: Economics

240 pages, Paperback

First published January 1, 1992

About the author

Paul Robin Krugman is an American economist, liberal columnist and author. He is Professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs, Princeton University, Centenary Professor at the London School of Economics, and an op-ed columnist for The New York Times. In 2008, Krugman won the Nobel Memorial Prize in Economics for his contributions to New Trade Theory and New Economic Geography.

Reviews

[Matthew · Rating 4 out of 5]

Tough and interesting. I haven't read every essay in this collection and frankly I probably won't be able to get through it; despite having read economics in college its been several years since I did any sort of formal economics and while if I read each chapter about five times I can get a sense of the general argument, I can't follow each line of mathematical and economic logic here. But I really picked up this book as it was highly recommended by John Hempton of the Bronte Capital blog (which I follow and am frighteningly impressed by of) and I can kind of see why -- Krugman is able to see through complicated issues clearly and use a combination of theory and empirical evidence to make very interesting observations and unknot the issue. Key is, and as Krugman himself says is the unifying theme of the collection, the methodology -- "take a real world problem that is the source of puzzlement or dispute, and construct a small theoretical model that in some simplified way seems to get to the essence of the problem" -- the goal being to build intuition rather than on the one hand, aim of complete theoretical micro-economic consistency from the ground up, or on the other, think of practical solutions without any attempt at theorizing the deeper issues. So the book really reads like a puzzle book: each essay is about a particular issue (typically in the 1990s) which he then takes apart. Having said that, because the issues are dated, the topics fairly specialized (although the last two chapters are quite presciently on the role of the US dollar and the sustainability of currency union), and while I admire his analytical process I am not conversant enough with the literature to gauge its accuracy or authority, it is not exactly a priority read. Am thus probably putting it aside now for now for something more immediately relevant. But if I ever get snowed in and need some intellectual stimulation this would be ideal.

[Richard Marney · Rating 5 out of 5]

A re-read of Dr. Krugman’s seminal work on financial crises. Although the return to this book at this time was motivated by a current research project, I found the added benefit of thinking through the likelihood of a Trump/MAGA “big-beautiful” US financial crisis (no longer the stuff of a grade B movie) and what Dr. Krugman would have to say!!