US economist Paul Krugman wins Economics Nobel

13 October 2008

(Credit: Office of Communications, Princeton University)

US economist Paul Krugman has been awarded the 2008 Nobel prize for economics ''for his analysis of trade patterns and location of economic activity.''

A prominent economist who writes columns for the New York Times, Krugman is a well-known critic of the Bush administration and blames the current financial market meltdown on its zeal for deregulation and loose fiscal policies.

Krugman, an advocate for stringent regulations for the financial sector, had once said that weak banks in India should be closed.

"It may sound hard-hearted, but you cannot keep unsound financial institutions operating simply because they provide jobs. There can be a huge amount of damage a bad bank can create. There is a cruelty to our market system, but that cruelty cannot be eliminated. The alternative is fraught with danger, that of carrying on with the weak banks," he said.

During his visit to India in the midst of the peak of the Asian crisis, he had  suggested adequate capitalisation of banks, closing down weak ones and leaving the convertibility programme where it was.

"Leave currency convertibility where it is. It's an extremely dangerous world out there. The risks of getting caught in the pinball game are too high,'' he had said.