September 24, 2003
My Favorite Paul Krugman Essay

As everyone knows, I am a huge fan and admirer of Princeton economist Paul Krugman*. Everyone should go and buy Paul Krugman (2003), The Great Unraveling: Losing Our Way in the New Century (New York: Norton: 0393058506). And everyone who can should try to go see him talk on Friday September 26, 12:00-1:30, Andersen Auditorium, Haas School, U.C. Berkeley. However, The Great Unraveling: Losing Our Way in the New Century doesn't contain my favorite Krugman essay. This is my favorite Krugman essay, from Paul Krugman (1998), The Accidental Theorist (New York: Norton: 0393046389).... An Unequal Exchange Paul Krugman To a naive reader , Edward N. Wolff's Top-Heavy: A study of the increasing inequality of wealth in America might seem unlikely to provoke strong emotional reactions. Wolff , a professor of economics at New York University, provides a rather dry matter of fact summary of trends in wealth distribution, followed by a low-key case for a modest wealth tax. Although Wolff has done a commendable technical job in combining data from a number of sources to produce a fuller picture-in particular his book tells us more about both long term trends and international comparisons that has previously been available-the rough outlines...

Posted by DeLong at 04:50 PM

September 12, 2002
Ken Rogoff on the IMF

Ken Rogoff on the claim that IMF bailouts take the money of rich-country taxpayers, give it to the unworthy, and so create "moral hazard". (He also covers a host of other issues.) ...It would be hard to overstate the influence of the popular perception that IMF crisis loans are thinly disguised bail-outs, with the tab paid mainly by ordinary taxpayers in the industrialised world. The presumed need to limit such bail-outs, and their adverse long-term incentive effects, is a central element of virtually every important plan out there to improve the way the IMF does business. The challenge posed by the bail-out view is not simply lack of transparency—that IMF loans are really outright transfers and should be called such. No, the deeper and more troubling implication is the “IMF moral hazard” theory. Simply put, if lenders are confident they will ultimately be bailed out by heavily subsidised IMF loans, they will extend too much credit to emerging-market debtors at rates that do not reflect the true underlying risk. The result? Bigger and more frequent crises than if the IMF did not exist. Giving the IMF more resources, it is argued, exacerbates the crises it was designed to alleviate....

Posted by DeLong at 02:21 PM