It is hard to think of a more inevitable Nobel prize winner than Paul Krugman. And I guess today the Nobel committee agreed and awarded him the prize. Before he turned his career towards the popular, Krugman revolutionised trade theory, the theory of currency markets and economic geography. It was on the latter part that I had most interaction with him as his tutorial assistant for his 1994 Stanford class on the subject.
Paul Krugman’s earlier work was rejected consistently. When George Shepherd and I wrote to him (in 1993) researching our article on classic rejections he wrote back: “This is in response to your letter of April 3 requesting stories about paper rejections — if any, you say!! As it happened, your letter arrived in the same day’s mail as the second rejection of a paper that I thought (and still think) is one of my better ones. I don’t know what other peoples’ experience is, but I would estimate that 60% of my papers sent to refereed journals have been rejected on the first try.” And this was during his hey-day.
Krugman’s seminal paper on monopolistic competition and trade that was cited by the Nobel committee was one of those rejected by the QJE in 1978. He got a single referee report after 8 months from a referee who agreed these issues were important “but did not feel that our understanding of these issues would be helped by writing down formal models.” The paper was eventually pushed through the Journal of International Economics by its editor Jagdish Bhagwati despite two adverse reports. Krugman had been Bhagwati’s student so it took quite a bit of courage to overule some distinguished referees. Indeed, I met one of those referees a few years ago and they still believe that the paper should not have been published!
It was around this time that a frustrated Krugman wrote his Theory of interstellar trade. Had they been around then, this paper would have won Krugman an Ig-Nobel award and so he could have achieved a rare double. As it was, when he looked at interstellar trade he used none of the tools he developed for terristrial trade. Ironic since you’d think those star ships would involve fixed costs.
Krugman’s paper on “Target Zones and Exchange Rate Dynamics” was also rejected (this time by the JPE) for being of “insufficient general interest.” It took a few more years before coming out in the QJE and by the time had hundreds of citation. Krugman wrote “in fact, I had to add a postscript to the QJE version referring to subsequent literature.”
Here are some of Paul Krugman’s recent achievements.
- Krugman’s best Slate column as nominated by Slate. This is the best explanation of booms and crashes in macroeconomics that there is. It has a parenting genesis and so I referred to it here.
- Krugman’s best NYT column as nominated by me. This was on the strange accounting standards that led to our last period of corporate failure.
- His best line as nominated by me.
- Lowest blog post word count to comment count ratio ever! 8 to 1873 (before comments were closed)
Usually, Nobel prize winners spend the week after winning commenting on the economy. I guess this year there will be more than the usual demand. But in Krugman’s case, it is a stage he already occupies.