Monday, 2 February 2009

My prediction about Paul Krugman and protectionism

I wrote this item at the beginning of January when the steel industry first started pleading for a "Buy American" clause (thanks to Greg Mankiw for the alert).

As you'll see, I predicted that Paul Krugman might make an argument for a form of protectionism. I felt slightly guilty about ascribing an opinion to someone in advance. Today he has posted his actual view on the topic - have a look and see how close I was.

1 comment:

Nick Rowe said...

Well you were right on the outcome, but not quite right on the details.

You predicted he would come up with some sophisticated economic theory. The theory he used was the simplest keynesian cross (and he is wrong to use that theory with its implicit assumption of fixed exchange rates). But his political economy argument was interesting, and no obviously wrong.

I.e. if the world were on fixed exchange rates, I might be tempted to say he's right. But it isn't, so he's wrong.