Place Prosperity and People Prosperity: The Delineation of Optimum Policy Areas
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Abstract
The controversy over the identification of "place prosperity" with "people prospecity" can best be systematically analyzed in terms of the concept of an optimum policy area. This chapter deals with this constraint in mind, have been, first, to indicate how the concept of an optimum currency area can be broadened to incorporate other dimensions, and thus to provide the optimum policy area as a framework for analysis. It suggests a criterion for the delineation of optimum policy areas, which avoids the dead-end of the Mundell-McKinnon paradox and which can be extended to incorporate a variety of analytical complexities associated with economic growth. The chapter discusses the Phillips Curve relates to the Distribution of Unemployment" in the United Kingdom and the United States. Deviations in optimum inflation rates are due to differences in the underlying Phillips curves, that the trade-off preferences of both regions can be represented by the same family of II curves.