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英国Financial economics专业优秀范文论文写作指导 INTERNATIONAL MONETARY ECO

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Theory of optimum currency areas
a group of economic entities (individuals, regions, nations) among which welfare is
maximised through fixed exchange rates (or a common currency) and a flexible
exchange rate towards the rest of the world.
The notion of „optimum currency areas‟ was coined by Mundell in 1961 who defined optimality „in
terms of ability to stabilise national employment and price levels‟. He proceeds to define an
economic region as an optimal currency area when it exhibits characteristics that lead to an automatic
removal of unemployment and payments disequilibria; automatic in the sense that no interference is
required from monetary and fiscal policies to restore equilibrium. The conclusion given is that a
currency area should be formed in that  economic region where such costs can be minimised, the
implication being that the maximum net benefits of a currency area would then be accomplished. 
Optimal currency area theory therefore concentrates upon defining those characteristics (i.e.
preconditions) which have been identified as relevant for choosing the likely participants in an
optimum currency area. The following is a list of recognised characteristics:
similarity of inflation rates - if relative prices rise faster in one country than another, it will
become increasingly uncompetitive unless it can reduce wages and prices back to the norm.
Consequently, a persistently higher propensity to inflation within one country will result in
unemployment, concentrated within depressed areas, in the absence of devaluation or
compensatory price changes.
(ii) the degree of factor mobility - if wages and prices are sticky, and devaluation is not an option,
an uncompetitive position for an individual country can be reconciled if factor mobility is high. 
(iii) price and wage flexibility - the transition toward adjustment within a currency union is less
likely to be associated with unemployment in one region and inflation in another. This largely
restates (ii) except for the fact that the former relates to physical movement of resources whilst
this condition concerns the movement of the price of those resources.
(iv) degree of commodity diversification - highly diversified economies will respond better to
currency union than less diversified economies since they provided greater insulation against a
variety of external shocks.
(v) degree of goods market integration - countries that possess similar production structures are

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