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Using quarterly data for a sample of 17 industrial countries, the purpose of this paper is to study asymmetry in the face of monetary shocks compared to government spending shocks.

The paper outlines demand and supply channels determining the asymmetric effects of monetary and fiscal policies. The time‐series model is presented and an analysis of the difference in the asymmetric effects of monetary and fiscal shocks within countries is presented. There then follows an investigation of the relevance of demand and supply conditions to the asymmetric effects of monetary and fiscal shocks. The implications of asymmetry are contrasted across countries.

Fluctuations in real output growth, price inflation, wage inflation, and real wage growth vary with respect to anticipated and unanticipated shifts to the money supply, government spending, and the energy price. The asymmetric flexibility of prices appears a major factor in differentiating the expansionary and contractionary effects of fiscal and monetary shocks. Higher price inflation, relative to deflation, exacerbates output contraction, relative to expansion, in the face of monetary shocks. In contrast, larger price deflation, relative to inflation, moderates output contraction, relative to expansion in the face of government spending shocks. The growth of output and the real wage decreases, on average, in the face of monetary variability in many countries. Moreover, the growth of real output and the real wage increases, on average, in the face of government spending variability in many countries. Asymmetry differentiates the effects of monetary and government spending shocks within and across countries. The degree and direction of asymmetry provide a new dimension to differentiate between monetary and fiscal tools in the design of stabilization policies.

The paper's evidence sheds light on the validity of theoretical models explaining asymmetry in the effects of demand‐side stabilization policies. Moreover, the evidence should alert policy makers to the need to relax structural and institutional constraints to maximize the benefits of stabilization policies and minimize the adverse effects on economic variables.

Purpose – This chapter investigates the role of infrastructure aid to developing countries for determining the effect on national income and consumer welfare. The chapter further demonstrates the conditions for the Dutch disease effect by decomposing the output effects of infrastructure aid into the initial factor-saving effect, factor-substitution effect and nontraded good effect.

Methodology/approach – This chapter extends the Heckscher−Ohlin model to a 3×2 case with two traded goods and a nontraded good, and derives comparative static results on factor prices, the price of nontraded goods, foreign exchange rate, sectoral outputs, and national income and consumer welfare.

Findings – It is shown that for a recipient country, infrastructure aid to either the export or import sector necessarily raises national income and consumer welfare, whereas the same aid to the nontraded good sector does not affect national income but raises consumer welfare. Infrastructure aid may lead to a Dutch disease effect via its three effects on industrial outputs: the initial factor-saving effect, factor-substitution effect and nontraded good effect.

Research limitations/implications – This chapter considers infrastructure capital as a public input, but it is devoid of analysis of inter-industrial spillover effects that the infrastructure capital generates to other sectors.

Practical implications – This chapter reveals several aspects of infrastructure aid that the practitioners of aids must consider.

This paper seeks to estimate the long‐term effects on output of different fiscal policies in Portugal.

Results are obtained from accumulated impulse response functions associated with unrestricted VAR models that include several public spending and taxation variables in addition to output.

Empirical results suggest that the effects of fiscal policies are within the Keynesian paradigm for public investment and direct taxation. In turn, non‐Keynesian effects dominate in the case of intermediate public consumption and indirect taxation where the effects are negligible.

Cuts in public consumption and increases in indirect taxations seem to be the most desirable instruments for fiscal consolidation in Portugal. Also, deficit‐neutral policies that offset increases in public investment with increases in indirect taxes have long‐term positive effects on output. The same is true for cuts in direct taxation offset with cuts in all forms of public spending except for public investment.

This is one of the few papers in this literature to use disaggregated public spending and taxation data. It is also a seminal application to the Portuguese case.

This study examines the innovation-efficiency linkage for Indian and Chinese manufacturing and service firms.

We applied the stochastic production and cost frontier approach to determine the output and cost efficiency of the firms surveyed in World Bank enterprise surveys. We then used both unconditional and conditional propensity score matching (PSM) estimation techniques to examine the effects of innovation as well as R&D on output and cost efficiency of the firms surveyed.

The study results suggest that innovation-efficiency linkage varies between countries and sectors. Innovations significantly raise output and cost efficiency of Indian manufacturing firms, whereas innovations in Chinese manufacturing firms are cost-oriented and negatively affect output efficiency. For the service firms of both countries, innovations are significantly positively linked with output and cost efficiency. The study also suggests that R&D acts as a crucial moderator for innovation-efficiency linkage for Chinese manufacturing firms but not for Indian firms, and the interaction effects of innovations are not substantially higher in magnitude than their individual effects. Finally, conditional PSM results suggest knowledge spillover for effective innovations of Indian firms, whereas R&D is a must for substantial innovation-efficiency linkage in Chinese firms.

This study offers quite a few crucial policy decisions concerning the relationship between innovation and efficiency as well as the moderation effect of R&D on innovation-efficiency linkage. It concludes that the effects of innovation on firms' efficiency and the role of R&D as a moderator of the innovation-efficiency relationship differ between India and China across the manufacturing and service sectors.

The assignment of targets to instruments in developing countries cannot satisfactorily follow any simple universal rule. Which approach is appropriate is influenced by whether the economy is dominated by primary exports, by the importance of the domestic bond market and bank credit, by the extent of existing restriction in foreign exchange and financial markets, by the presence or absence of persistent high inflation, and by the existence or non‐existence of an active international market in the country's currency. Eighteen observations and maxims on stabilisation policy are tentatively drawn (pp. 64–8) from the material reviewed, and the maxims are partly summarised (pp. 69–71) in a schematic assignment, with variations, of targets to instruments.

This chapter provides an empirical assessment of the effects of infrastructure provision on structural change and aggregate productivity using industrylevel data for a set of developed and developing countries over 1995–2010. A distinctive feature of the empirical strategy followed is that it allows the measurement of the resource reallocation directly attributable to infrastructure provision. To achieve this, a two-level top-down decomposition of aggregate productivity that combines and extends several strands of the literature is proposed. The empirical application reveals significant production losses attributable to misallocation of inputs across firms, especially among African countries. Also, the results show that infrastructure provision has stimulated aggregate total factor productivity growth through both within and between industry productivity gains.

The role of money and monetary policy of the central bank in pursuing macroeconomic stability has significantly changed over the period since the end of World War II. Globalization, liberalization, integration, and transition processes generally shaped the crucial milestones of the macroeconomic development and substantial features of economic policy and its framework in Europe. Policy-driven changes together with variety of exogenous shocks significantly affected the key features of macroeconomic environment on the European continent that fashioned the framework and design of monetary policies.

This chapter examines the key basis of the central bank’s monetary policy on its way to pursue and preserve the internal and external stability of the purchasing power of money. Substantial elements of the monetary policy like objectives and strategies are not only generally introduced but also critically discussed according to their accuracy, suitability, and reliability in the changing macroeconomic conditions. Brief overview of the Eurozone common monetary policy milestones and the past Eastern bloc countries’ experience with a variety of exchange rate regimes provides interesting empirical evidence on origins and implications of vital changes in the monetary policy conduction in Europe and the Eurozone.

Previous studies on tourism input-output (IO) primarily focus on a single year’s snapshot or utilize outdated IO coefficients. The purpose of this paper is to analyze the multi-period development of regional tourism capacities and its influence on the magnitude of the industry’s regional economic contribution. The paper highlights the importance of applying up-to-date IO coefficients to avoid estimation bias typically found in previous studies on tourism’s economic contribution.

For the period 2008-2014, national IO tables are regionalized to estimate direct and indirect economic effects for output, employment, income and other value-added deffects. A comparison of Leontief inverse matrices is conducted to quantify estimation bias when using outdated models for analyzing tourism’s economic contribution.

On the one hand, economic linkages strengthened, especially for labour-intensive sectors. On the other hand, sectoral recessions in 2012 and 2014 led to an economy-wide decline of indirect effects, although tourists’ consumption was still increasing. Finally, estimation bias observed after applying an outdated IO model is quantified by approximately US$4.1m output, 986 jobs full-time equivalents, US$24.8m income and US$14.8m other value-added effects.

Prevailing assumptions on IO modelling and regionalization techniques aim for more precise survey-based approaches and computable general equilibrium models to incorporate net changes in economic output. Results should be cross-validated by means of qualitative interviews with industry representatives.

Additional costs for generating IO tables on an annual base clearly pay off when considering the improved accuracy of estimates on tourism’s economic contribution.

This study shows that tourism IO studies should apply up-to-date IO models when estimating the industry’s economic contribution. It provides evidence that applying outdated models involve the risk of estimation biases, because annual changes of multipliers substantially influence the magnitude of effects.

The purpose of this study is to examine the total economic impact of tourism at the regional level in Central Finland. This paper aims to clarify the extent to which tourism contributes to regional output, employment, income and taxes in tourism-related sectors.

This study is based on a regional input–output analysis. The author calculates the effects of tourism on regional output, demand, wages, employment and national and regional taxes in Central Finland.

The author’s regional input–output analysis reveals that tourism has a substantial impact on production in Central Finland (including the direct and indirect effects of consumption by tourists in different sectors). Moreover, the effects of tourism expenditures on employment and residents’ incomes in tourism-related sectors in Central Finland are quite significant.

Many limitations of this study stem from the assumptions of the input–output model. Other limitations relate to the analysis of the impacts of tourism on household taxes, savings, consumption and net income. Our study uses average figures, which may overstate the effect of tourist expenditures on taxes because tourism jobs are often low paying.

The study yields results that can be used to frame regional policy. The results may be useful for policymakers in planning for tourist attractions. Furthermore, local authorities may use the results to guide decisions regarding infrastructure investments or improvements to the operating environment of tourism industries.

Many studies analyse the economic impact of events at the regional level using input–output analysis. National-level tourism impact studies using the input–output technique have also been conducted. Studies focussed on the economic impact of tourism at the regional level typically examine the macroeconomic (income, output and employment) effects of tourism. Consequently, these studies have focussed on estimating output, employment and income multipliers (Mazumder et al., 2012). The author’s contribution is a regional input–output analysis of direct and indirect impacts of tourism expenditures on production, demand, wages, income and employment in the whole economy at the regional level (in Central Finland). The author also analyses the impacts of tourism on national and regional taxes. The results of this study could be used by planners and policymakers involved in regional planning and development.