Wednesday, October 13, 2010

Krugman's universe

Some horrible people say that economists (particularly theory types) suffer from physics-envy. I would not say that, in public anyway, 'though as envies go it could be worse. Not content with suffering such insults, Paul Krugman has just published a paper (though written in 1978) providing the long awaited unification of trade theory and inter-stellar travel.


PAUL KRUGMAN, Economic Inquiry Volume 48, Issue 4, pages 1119–1123, October 2010

This article extends interplanetary trade theory to an interstellar setting. It is chiefly concerned with the following question: how should interest charges on goods in transit be computed when the goods travel at close to the speed of light? This is a problem because the time taken in transit will appear less to an observer traveling with the goods than to a stationary observer. A solution is derived from economic theory, and two useless but true theorems are proved.

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