Rethinking International Trade; The Age of Diminished Expectations

In This Review

Rethinking International Trade

By Paul R. Krugman
MIT Press, 1990
227 pp. $25.00
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The Age of Diminished Expectations

By Paul R. Krugman
Washington Post Company, 1990
110 pp. $195.00
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In Rethinking International Trade, this professor from the Massachusetts Institute of Technology has collected some of the major papers that have made him one of the principal formulators of the "new theory of international trade" that takes account of imperfect competition and increasing returns to production. Only the introduction, however, and some summaries can be read by people not familiar with contemporary economics and mathematical exposition. In great contrast, The Age of Diminished Expectations is lively, fast-moving and clearly designed to upset some major tenets of the conventional wisdom about the present state of the American economy and the policy choices facing the country. Some of the more startling effects are obtained by such traditional economic practices as dealing in large aggregates and assuming quick and frictionless shifts in trade and production. A judicious insertion of "maybe" goes along with a clear exposition of alternative lines of reasoning. Many people will disagree with much of what is said, but the book gets high marks for making readers think.

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