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Hardcover | ISBN: 9780262112246 | 244 pp. | 6 x 9 in | July 1997
Paperback | $25.95 Trade | £17.95 | ISBN: 9780262611343 | 244 pp. | 6 x 9 in | July 1997

Instructor Resources

The Age of Diminished Expectations, third edition


Paul Krugman's popular guide to the economic landscape of the 1990s has been revised and updated to take into account economic developments of the years from 1994 - 1997. New material in the third edition includes:

  • A new chapter—complete with colorful examples from Llyod's of London and Sumitomo Metals—on how risky behavior can lead to disaster in private markets.
  • An evaluation of the Federal Reserve's role in reining in economic growth to prevent inflation, and the debate over whether its targets are too low.
  • A look at the collapse of the Mexican peso and the burst of Japan's "bubble" economy.
  • A revised discussion of the federal budget deficit, including the growth concern that Social Security and Medicare payments to retiring baby boomers will threaten the solvency of the government.

Finally, in the updated concluding section, the author provides three possible scenarios for the American economy over the next decade. He warns us that we live in age of diminished expectations, in which the voting public is willing to settle for policy drift—but with the first baby boomers turning 65 in 2011, the economy will not be able to drift indefinitely.

About the Author

Paul Krugman is Professor of Economics and International Affairs at Princeton University and a New York Times columnist. He was awarded the Nobel Prize for Economics in 2008.


The Age of Diminished Expectations is a remarkable achievement, a quick read that tells you much of what there is to know about the great economic issues of the day.
Peter Passell, New York Times Book Review