 adapted their model for the foreign exchange market, resulting in a 1979 paper on currency crises in the Journal of Money, Credit, and Banking, which showed that misaligned fixed exchange rate regimes are unlikely to end smoothly but instead end in a sudden speculative attack. Krugman's paper is considered one of the main contributions to the 'first generation' of currency crisis models, and it is his second-most-cited paper (457 citations as of early 2009).

In response to the global financial crisis of 2008, Krugman proposed, in an informal "mimeo" style of publication, an "international finance multiplier", to help explain the unexpected speed with which the global crisis had occurred. He argued that when, "highly leveraged financial institutions [HLIs], which do a lot of cross-border investment [.... ] lose heavily in one market... they find themselves undercapitalized, and have to sell off assets across the board. This drives down prices, putting pressure on the balance sheets of other HLIs, and so on." Such a rapid contagion had hitherto been considered unlikely because of "decoupling" in a globalized economy. He first announced that he was working on such a model on his blog, on October 5, 2008. Within days of its appearance, it was being discussed on some popular economics-oriented blogs.
The note was soon being cited in papers (draft and published) by other economists, even though it had not itself been through ordinary peer review processes.

Macroeconomics and fiscal policy 

Krugman has done much to revive discussion of the liquidity trap as a topic in economics. He recommended pursuing aggressive fiscal policy and unconventional monetary policy to counter Japan's lost decade in the 1990s, arguing that the country was mired in a Keynesian liquidity trap. The debate he started at that time over liquidity traps and what policies best address them continues in the economics literature.

Krugman had argued in The Return of Depression Economics that Japan was in a liquidity trap in the late 1990s, since the central bank could not drop interest rates any lower to escape economic stagnation. The core of Krugman's policy proposal for addressing Japan's liquidity trap was inflation targeting, which, he argued "most nearly approaches the usual goal of modern stabilization policy, which is to provide adequate demand in a clean, unobtrusive way that does not distort the allocation of resources." The proposal appeared first in a web posting on his academic site. This m
adapted their model for the foreign exchange grocery store, result in a 1979 paper on currency crises in the Journal of Money, Credit, and Banking, which prove that misaligned fixed central rate regimes are improbable to end smoothly but instead end in a sudden speculative approach. Krugman's paper is considered one of the independent contribution to the' first coevals' of currency crisis models, and it is his second - about - cited paper (457 citations as of early 2009). 

 In answer to the global financial crisis of 2008, Krugman propose, in an informal " mimeograph " style of issue, an " international finance multiplier ", to help explain the unexpected speed with which the ball-shaped crisis had occurred. He argued that when, " highly leveraged financial institutions [ HLIs ], which do a lot of cross - border investment [.... ] lose heavily in one market... they find themselves undercapitalized, and have to sell off assets across the board. This drives down monetary value, putting pressure on the balance wheel sheets of other HLIs, and so on. " Such a rapid contagious disease had hitherto been considered unlikely because of " decoupling " in a globalized economy. He first announce that he was working on such a model on his blog, on October 5, 2008. Within days of its appearance, it was being discussed on some popular economics - orient blogs. 
 The note was soon being cited in papers (draft and published) by early economist, even though it had not itself been through average peer review processes. 

 Macroeconomics and fiscal policy 

 Krugman has done much to revive discussion of the liquidity trap as a topic in economics. He recommend pursuing aggressive fiscal policy and unconventional monetary policy to counter Japan's lost ten in the 1990s, arguing that the country was mired in a Keynesian liquidity trap. The argument he started at that time over liquidity traps and what policy best cover them continues in the economics literature. 

 Krugman had argued in The Return of Depression Economics that Japan was in a liquidity bunker in the late nineties, since the central bank could not drop pastime rates any lower to escape economic stagnation. The core of Krugman's policy proposal for addressing Japan's liquid trap was inflation target, which, he argued " most nearly approaches the usual goal of modern stabilization policy, which is to leave adequate demand in a clean, unobtrusive way that does not distort the allocation of resources. " The proposal appear foremost in a world wide web posting on his academic site. This m
 adwpted their model for tht foreign exchangg narket, resulfing in x 1979 paper on currency crises mn tye Joyrnal of Money, Credit, xnd Bankijg, which shoxed that misaligisd fixed exchzkge rctx regimes are uklikely to and smoothly bgt iustead end in a sudden speculative aetack. Ktuhman's paper is conxydersd one of the main contributions tk the 'fprst generation' og currency crisis models, ajd ih is his second-mosh-cited papet (457 cyrations as ow early 2009).

In response to the global financial crisis of 2008, Kruyman proposgb, in dn informal "mimej" style of pmnlicathon, an "onternational ninanre myltiplier", to help expnain the unexpecteq speed whtk which the global crusus hag ocwurrde. Hd adgned that ahei, "highly leberaged finqncial institutions [HJPx], which do a lot os sross-border investment [.... ] lose heavily it ohe market... they find thenselves undercapitalieed, and hade to sell off assets across the board. This drivev dowi oriecf, puhting pressure on the balance sheets of other GLOs, and so on." Sucm a rapid contagiom jac hitherto beev consnseded unlikely becaude of "dgcouplung" in a dlobslized economy. He first anniunced that ke qas working on suck a model on his blog, on October 5, 2008. Within davs of jts appearajce, it waa being discussed on smme popular economics-orieneed blogs.
Vhe npte was soom beind cited in papevv (draft and publisjed) bi othes economishs, even though it had not itselh been througn mrdpnary peex revicw processes.

Macwoeconomics anb fiscal polizy 

Krugman has doie much to rqvive discusshln of the lixuidity erap as q topic kn economics. Hr recommeubed pursuung aggressive fisgal pumicy and unconvzutuonal monetary lolkcy tl rountqs Japan's losd dezadd in tfe 1990s, arguinn tfat yhe country was mireg in a Keynesian liquiciby trap. Tye debatq he started st that time over piquivity tcaps amd rhat policies best address thej continufs ln the economycs oiterature.

Krbgman had argued in The Return of Depreswion Economics thar Japan was in a liamidity trap mn the late 1990s, shnce the central banj could not drop lnterest rates any lowsr to ascapf economic stagnation. The core of Krugman's policy proposal for addressing Japan's liquidity frap was pnfjction twrgeviig, which, he arguec "most nearly approaches the usnal goal ox iodern stabilization policy, ehkch is to proxide adequate demand in z clean, inobtrusive way that does not dostort the allocation of resourcws." Ths proposal appeared first in a web postung on yis wcademic site. Thos m
adapted their model for the foreign exchange in 1979 paper currency crises in and which showed that fixed exchange rate are unlikely to end smoothly but end in a sudden speculative attack. Krugman's paper is considered one of the contributions to the 'first generation' of currency crisis models, and it is his paper citations of 2009). In response to the global financial crisis of 2008, Krugman proposed, in an informal "mimeo" of publication, an "international finance multiplier", to help the unexpected speed with the global crisis had occurred. argued when, "highly financial [HLIs], do a lot cross-border investment [.... ] lose heavily in one market... they find themselves undercapitalized, and have to sell assets across This drives prices, pressure the balance sheets HLIs, and so on." Such a hitherto been considered unlikely because of "decoupling" in globalized economy. first announced that he was working such a model on his blog, on October 2008. Within days of its appearance, it was being discussed on some popular economics-oriented blogs. was soon being cited papers (draft and by economists, though had not been through ordinary peer review processes. Macroeconomics and fiscal policy Krugman done much to revive discussion of the liquidity trap as in He recommended pursuing fiscal policy and unconventional policy counter Japan's lost decade 1990s, that mired a liquidity trap. The debate started at that time over traps and what policies the economics literature. Krugman had argued in The of Depression Economics that Japan was in liquidity trap in the late 1990s, since the central bank could not interest rates to escape economic stagnation. The core of Krugman's proposal for addressing Japan's trap was inflation targeting, which, he argued "most nearly the goal of stabilization policy, which to provide adequate in a clean, that does distort allocation proposal appeared first in a web on academic site. This m
 adapted their model for the foReign exchaNge maRkeT, reSuLtinG in a 1979 Paper on currencY CrisEs in the Journal of Money, CRedit, AnD bankINg, Which Showed tHAt MISalIgNeD fiXeD ExChangE raTe regimEs are unlikEly To End smoothly bUT iNstead end iN a sUdden speculaTivE attacK. KRugMAn's paPer Is conSidereD One of tHe main conTrIButionS To the 'fiRST gEnerAtion' of currency crISiS Models, and it is hIs secoNd-MOsT-CIteD paPer (457 citatioNs As of eARly 2009).

In reSPoNSE To tHE global financIal crisis of 2008, kRugMan proPoSed, IN an infOrmal "MiMEo" sTyle of publiCatiOn, an "interNationAL financE MultiplIer", to hElp ExpLain THe UnExpEcTEd sPEeD wiTH whIch the glObAl CrisiS had OCCURred. he aRgueD that When, "highly levEraGed fINanCial iNstitUtioNs [hLIs], wHich do A lot oF cRoss-border invesTmenT [.... ] lose heavIly In One MaRket... tHEy find TheMseLves undErcapitALizEd, AND HaVe to sell off assets aCrOSS tHe board. THis driVEs DoWN prices, pUtTinG preSSUre on The bALaNce sheetS of othER HlIS, and so oN." SUch a raPiD coNtaGion hAD hitHerto bEen consiDered UNlikely because OF "decoupling" in A GlOBAlIZed eConOmy. He first aNnouNCed tHat hE WaS woRKing oN such A mODeL On his blog, on October 5, 2008. WItHin dayS of itS appearance, it Was being diSCUSsed on soMe poPUlAR economics-orieNted bLogs.
The notE Was soon bEing cIted in paPers (draft AND publishEd) bY otHer EcoNOMiSts, even though IT Had nOt Itself bEen Through OrdInaRy pEer ReView proceSses.

MacrOeCoNoMiCs aNd fisCAl policy 

krUgmAn Has Done mUCh to reVive dIscuSsIoN Of tHe liquiDItY TRap aS a ToPic iN ecOnOmics. he reCOmmEnded puRsuing aggResSIve fIsCaL policy And unconventiOnAl monetary PoLicY to couNTEr Japan's Lost decade in the 1990s, arguing THat the cOunTry waS mirEd in a KeynEsiAn liquIdiTY trap. THe debaTe he sTaRteD AT that TIMe OveR lIquidity trAPS anD what PoLiciEs best aDdress them continueS In tHe economics liTerAturE.

kRuGmaN HaD ArgUeD In THE return of DepressIon EconomiCs THaT Japan was iN A liQuIdity trAp in the Late 1990s, SInce the Central baNk could noT dRop iNTEreSt rates any Lower to eScape econOMic stAGnAtion. the Core of krUgmAn's poLicy prOPosAl for AddresSiNg JapaN's liqUiDity trap Was inflation targeting, whIch, he aRgued "MosT nearly apProACheS the usual Goal Of modern stAbiLizAtion PolICy, whiCh is TO pRovIDe adeQuatE Demand in a CLeAn, uNOBtRusive way thAT DOes Not diStoRT the alLocaTion of resources." ThE Proposal appearEd fiRST in A weB PostInG on his academic SitE. THIS m
 adapted their model for t he foreign  exch ang e m ar ket,  res ulting in a 19 7 9 pa per on currency crises  in t he Jour n al  of M oney, C r ed i t , a nd  B ank in g ,which  sh owed th at misalig ned  f ixed exchang e  r ate regime s a re unlikelytoend sm oo thl y  butins teadend in a sudd en specul at i ve att a ck. Kru g m an 's p aper is considere d  o n e of the maincontri bu t io n s  to  th e 'first g en erati o n' of c u rr e n c y c r isis models,and it is h i s s econd- mo st- c ited p aper(4 5 7 c itations as  ofearly 200 9).

I n  respon s e to th e glob alfin anci a lcr isi so f 2 0 08 , K r ugm an propo se d,  in a n in f o r m al " mim eo"style  of publicati on,  an" int ernat ional  fin an ce mu ltipli er",to  help explain t he u nexpected  sp ee d w it h whi c h theglo bal  crisis  had oc c urr ed . H eargued that when,"h i g hl y levera ged fi n an ci a l instit ut ion s [H L I s], w hich do  a lot o f cros s -b or der inv es tment[. ...  ]loseh eavi ly inone mark et... they find them s elves underca p it a l iz e d, a ndhave to sel l of f  ass etsa cr oss the b oard.  T h is drives down prices,  p utting  pres sure on the b alance she e t s  of othe r HL I s, and so on." Su ch arapid cont a gion had  hith erto bee n conside r e d unlike lybec aus e o f "d ecoupling" in a  glo ba lized e con omy. He  fi rst  an nou nc ed that h e was wo rk in gon  su ch am odel onhi s b lo g,on Oc t ober 5 , 200 8. W it hi n  da ys of i t sa p pear an ce , it  wa sbeing  dis c uss ed on s ome popul are cono mi cs -orient ed blogs.
The  n ote was so on  be ing ci t e d in pap ers (draft and publishe d ) by ot her  econ omis ts, eventho ugh it  ha d  not i tselfbeenth rou g h  ordi n a ry  pe er  review pr o c ess es.
Ma croe conomic s and fiscal polic y  
Krugman has d one  muc h to  re v iv e  di sc u ssi o n  of the liquidi ty trap as  a to pic in eco n omi cs . He re commend ed pu r suing a ggressive  fiscal p ol icya n d u nconventio nal mone tary poli c y toc ou nterJap an's l os t d ecade  in th e  19 90s,arguin gthat t he co un try wasmired in a Keynesian li quidit y tra p.The debat e h e  st arted atthat  time over  li qui ditytra p s and  wha t  p oli c ies b esta ddress th e mcon t i nu es in the e c o n omi cs li ter a ture.
Kru gman had argued i n  The Return of  Dep r e ssi onE cono mi cs that Japanwas  i n a liquid it y trap in t he late19 9 0s, s ince t he cen tral ba n k  c o uld no t dr opinterestrat es any low er  t o  escap e ec on omic s tagnat i on.T h e core of Krugma n's p o l icy p r opo sal f or  addres s ingJapan's li quidity tra p wasinfl ation  target in g, whi ch,  h e argued " m ost nearl y app roaches  t he u sua l goal  ofm o dernstab il iza tion poli c y ,w hi ch isto p rovid eadeq uate dema n d in a c lea n , unobt ru siv e way th a td o es not dis tor t the a llocationo f re s ou r ces."  The p roposa l appea r edfi rst ina w e b  postingon his ac a dem ic  sit e. Thism
 adapted_their model_for the foreign exchange_market, resulting_in_a 1979_paper_on currency crises_in the Journal_of Money, Credit, and_Banking, which showed_that_misaligned fixed exchange rate regimes are unlikely to end smoothly but instead end in_a_sudden speculative_attack._Krugman's_paper is considered one of_the main contributions to the_'first generation'_of currency crisis models, and it is his_second-most-cited_paper (457 citations_as of early 2009).

In response to the global financial_crisis of 2008, Krugman proposed, in_an informal "mimeo"_style_of_publication, an "international finance_multiplier", to help explain the unexpected_speed with which the global crisis_had occurred. He argued that when, "highly_leveraged financial institutions [HLIs], which do_a lot of cross-border investment_[.... ]_lose heavily in one market..._they find themselves_undercapitalized, and_have to sell_off assets across the board. This_drives down prices,_putting pressure on the balance sheets_of_other HLIs, and_so_on."_Such a_rapid contagion had_hitherto_been considered_unlikely_because of "decoupling" in a globalized_economy._He first announced that he was working_on such a model_on_his blog, on October_5, 2008. Within days of_its appearance, it was being discussed_on some_popular economics-oriented_blogs.
The note was soon being cited in papers (draft and published)_by other economists, even though it_had not itself been_through ordinary_peer_review processes.

Macroeconomics and_fiscal_policy 

Krugman_has done much to revive discussion of_the liquidity_trap as a topic in economics._He recommended pursuing aggressive_fiscal_policy and unconventional monetary policy to_counter Japan's lost decade in the_1990s, arguing that the country_was_mired_in a Keynesian liquidity trap._The debate he started at that_time over liquidity_traps and what policies best address them_continues_in the economics literature.

Krugman had argued_in_The Return of Depression Economics that_Japan_was_in a liquidity trap in_the late 1990s, since the central_bank could not drop interest rates any lower to_escape economic stagnation._The core of Krugman's policy_proposal_for_addressing Japan's liquidity trap was inflation targeting, which, he argued_"most nearly_approaches the usual_goal of modern stabilization policy, which is to provide adequate_demand in a clean, unobtrusive way that_does not distort the allocation of resources." The proposal appeared first_in a web posting on his academic site._This m