Krugman wins Nobel for economics

Prof Krugman is a fierce critic of President George W Bush

American academic Paul Krugman has won this year's Nobel economics prize, it has been announced.

The Royal Swedish Academy of Sciences said the award recognised his analysis of trade patterns and where economic activity takes place.

It said Prof Krugman, 55, who teaches at Princeton University, had formulated new theories that answered questions about free trade and globalisation.

Prof Krugman said he hoped the $1.4m win would not change his life greatly.

"The prize will enhance visibility but I hope it does not lead me into going to a lot of purely celebratory events, aside from the Nobel presentation itself," he said.

Matt Frei interviews Paul Krugman

Prof Krugman lectures in economics and international affairs at Princeton University in New Jersey, and also writes a regular column for the New York Times.

He has long been a fierce critic of US President George W Bush's administration, arguing that its economic policies have helped spark the current financial crisis.

The Nobel jury said Prof Krugman's work had led to theories that could help explain the effects of free trade and globalisation and the driving force behind worldwide urbanisation.

'Terrified'

"He has thereby integrated the previously disparate research fields of international trade and economic geography," the academy said in its citation.

Prof Krugman's approach was based on the concept known as economies of scale - that many goods and services can be produced at less cost in long series, the citation said.

His research had showed the effects of that on trade patterns and on the location of economic activity, it added.

Speaking after the announcement of his win, Prof Krugman gave his verdict on current efforts to stem the global financial meltdown, saying: "I'm slightly less terrified today than I was on Friday.

"We are now witnessing a crisis that is as severe as the crisis that hit Asia in the 90s. This crisis bears some resemblance to the Great Depression," he said.

Prof Krugman's award is the last of six Nobel prizes announced this year. It is not one of the original Nobels, having been created in 1968 by the Swedish central bank in memory of Alfred Nobel.