Thursday, April 7, 2011

Paul Krugman: Such Elegant Ideas, but Not Always Simple

Wednesday 6 April 2011

One question that comes up occasionally from readers is: What would make me change my mind about how the economy works? Associated with this is the question of whether I have ever changed my views drastically in the face of events.

Let me answer the latter question first. I had a major change of views in the late 1990s, driven by events in Asia.

Until then I had pretty much accepted the “elegant, and conceptually simple” framework described recently by Olivier Blanchard, chief economist at the International Monetary Fund, on the organization’s Web site. Basically, I thought that conventional monetary policy could do the job of stabilizing the economy.

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