The winner of the Nobel economics prize has just been announced, and it's something of a surprise.

This year's award had gone to Paul Krugman, the Princeton academic who is perhaps most famous for his long-running series of opinion pieces in the New York Times.

Paul Krugman, Princeton professor

Krugman (left) gets the gong, and the 10 million kronor (£816,000), for his "analysis of how economies of scale can affect trade patterns and the location of economic activity".

A noted liberal, Krugman is seen as a neo-Keynesian so his victory is timely. There's quite a revival of interest in John Maynard Keynes's theories at present, especially his argument that government intervention is the best way to stop a downturn becoming a depression.

His victory is also unexpected. Krugman got little mention in the speculation in the run-up to today's announcement.

He wasn't even top of the New York Times' own shortlist (although the NYT did give a cheeky hint that Krugman had been smartening himself up ahead of a call from Sweden).

The favourite in the pre-awards betting was Eugene Fama, an economist at the University of Chicago. Fama developed the efficient market hypothesis, which argued that all traded assets – from bonds to mortgage-backed securities – are already accurately valued based on the information available to investors.

Perhaps the Nobel committee felt that this wasn't really Fama's year, as the fear and panic following the credit crunch threatens the collapse of the entire financial system.

And, to be fair, choosing any winner in the current climate is no easy task. Rather like picking the winner of the "best run British bank" award, perhaps.

Krugman's also a great writer, as you can see from his essays on the New York Times.

Only yesterday he was applauding Gordon Brown and Alistair Darling for showing the rest of the world how to respond to the financial crisis…..

There's a full explanation of the reasoning behind Krugman's award in a pdf here.