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To investigate the relationship between two of the most important and most closely monitored macroeconomic variables: inflation and growth are the main purpose of this chapter. It is generally agreed in the literature that inflation only has an adverse effect on economic growth after it crosses a threshold level. In a country with a fixed exchange rate, inflation would lead to a deterioration of the trade balance and to speculative capital outflows in anticipation of devaluation. The threshold level of inflation above which inflation significantly slows growth is estimated at 1–3 percent for industrial countries and 11–12 percent for developing countries. The negative and significant relationship between inflation and growth for inflation rates above the threshold level is quite robust.

ETRs have been implemented in several of the old EU member states, such as Denmark, Germany, Finland, Netherlands, Sweden, and the UK. This chapter very briefly identifies the key characteristics of these green tax reform packages, with a special focus on Germany and the UK. Recent years have seen a growth in support for ETRs in the new EU member states, with Estonia and the Czech Republic introducing this policy instrument, and the chapter discusses the prospects for ETR in new EU member states, with a focus on the Estonian ETR, highlighting some differences in the overall revenue structure between old and new EU member states. The chapter then reviews the theoretical literature on ETR and the ‘double dividend’ hypothesis, before moving on to a review of the empirical modelling literature that assesses the effects of the ETRs on the environment and the economy through estimates of changes in emissions, sectoral effects, such as changes in output, employment, and trade, and macroeconomic variables, such as GDP and total employment.

This chapter explores some theoretical and empirical implications of the changed international capital flows in East Asian economies after the currency crisis. It shows that macroeconomic impacts will vary depending on which strategy developing countries take for self-protection. The first paper of the chapter investigates what impacts an increased aversion to liquidity risk can have on current accounts and the other macroeconomic variables in a simple open economy model. The second part provides some empirical evidence in East Asia that supports the theoretical implications. In particular, it focuses on the changes of foreign debt maturity structures and their implications in East Asian economies.