Short answers, pulled from the story.
Krugman won the 2008 Nobel Memorial Prize in Economic Sciences for his contributions to new trade theory and new economic geography. The prize committee cited his analysis of how economies of scale and consumer preferences for diverse goods shape international trade patterns and the geographic distribution of economic activity. He was the sole recipient that year.
New trade theory explains why countries with similar economies trade with each other, something comparative advantage cannot fully account for. Krugman's 1979 paper in the Journal of International Economics argued that consumers prefer variety in goods and that production benefits from economies of scale, so countries specialize in particular brands and import others, generating trade even between similar nations.
Krugman retired from The New York Times on the 9th of December 2024, after writing that his editors had begun discouraging columns likely to get people, particularly on the right, riled up. He also cited pressure for what he considered false equivalence and a push to reduce his output. He turned down an offer to write once rather than twice a week and instead launched a Substack newsletter.
New economic geography, which Krugman began developing in a 1991 paper in the Journal of Political Economy, explains why manufacturing and population concentrate in dense clusters rather than spreading evenly. When scale economies favor large production sites and those sites generate demand that attracts more production, a self-reinforcing agglomeration process produces cities and industrial regions with higher incomes and greater variety of goods.
A May 2011 Hamilton College study of 26 commentators who made predictions between September 2007 and December 2008 found Krugman the most accurate, correct in 15 out of 17 predictions. Only nine of the 26 subjects performed better than chance overall. Krugman also correctly anticipated aspects of Japan's lost decade and the dynamics of the 2008 financial crisis.
Krugman argued that Japan fell into a Keynesian liquidity trap during the 1990s, where interest rates had been cut as far as possible but businesses and households still refused to borrow due to uncertainty. His prescription was inflation targeting, to shift expectations and stimulate demand without distorting resource allocation. He later drew parallels between Japan's lost decade and the late-2000s recession.