Why does Paul Krugman use economic models?
Models are essential tools for clarity. They allow us to isolate specific economic forces and understand their consequences. Think of them as simplified maps of a complex reality. By stripping away extraneous details, we can see the underlying logic of how markets or policies might function. I often use established frameworks like the IS-LM model or comparative advantage, but I'm also keen to adapt them or develop new ones to capture nuances like increasing returns or sticky prices.
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