Finally, I will admit that there is something called optimal tariff theory.

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Oddly, however, Mr Mundell very strongly believes that Europe is, in practice if not in theory, an optimal currency area.

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Rather than explaining the cycle in terms of market failure, as Keynes did, real business-cycle theory views a recession as the optimal response by households and firms to a shift in productivity.

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Yet even if Lord Layard's theory is right, his figure for the optimal tax rate looks like little more than convenient guesswork.

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