He is cited for trade theory and, appropriately, location theory and economic geography. He could have been cited for his work on currency crises as well. Here are the most basic links on Paul, it is hard to know where to start. I have to say I did not expect him to win until Bush left office, as I thought the Swedes wanted the resulting discussion to focus on Paul's academic work rather than on issues of politics. So I am surprised by the timing but not by the choice.
Here's Krugman's NYT column from today; there is so so much on him and by him. Here is his blog. Here is a short post-prize interview. He has been influential in pushing the United States toward a bank recapitalization plan. Here is Krugman on video, from just the other day, talking about the crisis and how bad it might get. Krugman, of course, also called the housing bubble in advance.
And here's Yglesias on what this might mean for the public's perception of economics as it relates to politics:
One hopes that this will open doors for a somewhat broader public understanding of what the field of economics is all about. In the public debate, my sense is that “economics” tends to be understood as mostly comprising a series of very simple models indicating the desirability of laissez faire (make it more expensive to hire workers by raising the minimum wage and the level of employment will go down — supply and demand, economics 101, QED) that leave it somewhat puzzling as to how this is even a field in which people do PhD-level research. That, of course, isn’t right as you can see from The Economist’s poll of economists or John McCain’s struggle to find 100 economists who’ll back up his campaign’s assertions.
Meanwhile, Krugman has become known to a wide audience as a left-of-center newspaper columnist. The fact that he’s a credentialed economist has always been well-known, but the point that he’s actually a really well-regarded economist is not all that well-understand. But a Nobel Prize is something people understand. It doesn’t make his political pronouncements the word of God, of course, and there are Nobel Prize winning economists on the right as well. But it does underscore the fact that very many people who really and truly know what they’re talking about think the progressive approach to economic and social policy is the way to go.
Personally, I'm skeptical. (Big surprise, right?) Conservatives (I'm looking at you, Ezzie) will continue to insist that liberals/progressives/Democrats just don't understand economics. The Nobels are biased. The academy is biased. Income growth is significantly higher under Democratic presidents by lucky coincidence. The stock market is almost twice as good under Democratic presidents (and that's not including this month's crash!) by lucky coincidence. Etc. The whole world is conspiring to hide the fact that Republican economics would work, really, if ever they just got a fair shake. You know, just like "real communism" would.