O entendimento dos fatores locacionais que afetam a inovação ajuda a compreender a localização das atividades inovativas, dentre os quais há a mobilidade de trabalhadores qualificados (trabalhadores com Ensino Superior ou em ocupações técnicas e científicas). Em razão de o conhecimento estar atrelado às pessoas, a transferência desses trabalhadores para outras regiões impacta nas possibilidades e oportunidades de se compartilhar conhecimento. Assim, o objetivo desta tese é avaliar se a mobilidade de trabalhadores qualificados influencia os resultados da inovação no nível regional. A partir dos microdados da Relação Anual de Informações Sociais Identificada (RAIS ID), foi analisada a mobilidade dos trabalhadores formais entre as microrregiões brasileiras em todo o país entre os anos de 2003 e 2008. Os microdados foram inseridos em um banco de dados relacional (PostgreSQL), o que permitiu a criação de indicadores de mobilidade de trabalhadores, construídos para três recortes de trabalhadores: totais, com Ensino Superior e em ocupações técnicas e científicas. Foram calculadas as mobilidades para todas as atividades econômicas e para atividades econômicas selecionadas (Agricultura, Indústria Extrativa e de Transformação), gerando indicadores, a fim de mapear a mobilidade de trabalhadores no Brasil; em seguida, foram realizadas estimações econométricas baseadas na função produção do conhecimento. Entre os principais resultados, observa-se que, em todas as atividades econômicas e ao serem excluídos movimentos de trabalhadores intrarregiões metropolitanas, a entrada de trabalhadores nas microrregiões é benéfica para a inovação. Já para a perda e para a mobilidade bruta de trabalhadores, verifica-se o efeito dos benefícios gerados pela circulação de conhecimento nesses ambientes. Ao se analisar a mobilidade nas atividades econômicas selecionadas, constata-se a importância da mobilidade de trabalhadores qualificados para a inovação, cujo benefício está relacionado com a importância do conhecimento para as atividades inovativas e com a sua exploração nas atividades econômicas selecionadas. O desenvolvimento de capacidades de absorção em determinadas áreas facilita a assimilação e a acumulação de conhecimentos que podem ser derivados da circulação de novos trabalhadores em uma região. / The analysis of the locational factors that have influence over innovation is the key to understand the localization of innovation. The mobility of skilled workers is one of these factors. The mobility of skilled workers can be important for innovation activities because the knowledge, that is an input for innovation, is embodied in people. So when people move to other location the possibilities to share this knowledge are increased. In this way, the aim of this thesis is to evaluate if the mobility of skilled workers can influence the regional innovation in Brazil. The mobility of workers was analyzed with micro-data of formal workers between the micro-regions of Brazil on the years of 2003 to 2008. The micro-data were inserted in an open source relational database (PostgreSQL). The indicators of mobility were created for workers in general, workers with higher education and workers in technical and scientific occupations and economics activities (Agriculture, Extractive and Manufacturing). With this data it was possible to map the mobility of workers in Brazil. Afterwards the knowledge production function framework at the regional level was used to estimate the impact of the mobility on regional innovation. When the mobility of workers was calculated for all activities and excluding mobility within the same metropolitan region, the empirical approach shows that the influx of workers is beneficial for innovation. Furthermore, for the analysis of the outflow and the gross mobility it was possible to notice the benefits of circulation of people and the benefits of knowledge share. For the evaluation of mobility of workers in selected economics activities, it was possible to notice the benefits of mobility of skilled workers for regional innovation. The benefits of circulation of skilled workers are related with the importance of knowledge in innovation activities and also with the possibilities of exploration of knowledge by local agents. Furthermore, the development of absorption capacity in selected areas ease the assimilation and accumulation of new knowledge derived from circulation of new workers in one region.

The active use of macroeconomic policies to smooth economic fluctuations and, as a consequence, the stance that policymakers should adopt over the business cycle, remain controversial issues in the economic literature. In the light of the dramatic experience of the early 1930s’ Great Depression, Keynes (1936) argued that the market mechanism could not be relied upon to spontaneously recover from a slump, and advocated counter-cyclical public spending and monetary policy to stimulate demand. Albeit the Keynesian doctrine had largely influenced policymaking during the two decades following World War II, it began to be seriously challenged in several directions since the start of the 1970s. The introduction of rational expectations within macroeconomic models implied that aggregate demand management could not stabilize the economy’s responses to shocks (see in particular Sargent and Wallace (1975)). According to this view, in fact, rational agents foresee the effects of the implemented policies, and wage and price expectations are revised upwards accordingly. Therefore, real wages and money balances remain constant and so does output. Within such a conceptual framework, only unexpected policy interventions would have some short-run effects upon the economy. The "real business cycle (RBC) theory", pioneered by Kydland and Prescott (1982), offered an alternative explanation on the nature of fluctuations in economic activity, viewed as reflecting the efficient responses of optimizing agents to exogenous sources of fluctuations, outside the direct control of policymakers. The normative implication was that there should be no role for economic policy activism: fiscal and monetary policy should be acyclical. The latest generation of New Keynesian dynamic stochastic general equilibrium (DSGE) models builds on rigorous foundations in intertemporal optimizing behavior by consumers and firms inherited from the RBC literature, but incorporates some frictions in the adjustment of nominal and real quantities in response to macroeconomic shocks (see Woodford (2003)). In such a framework, not only policy "surprises" may have an impact on the economic activity, but also the way policymakers "systematically" respond to exogenous sources of fluctuation plays a fundamental role in affecting the economic activity, thereby rekindling interest in the use of counter-cyclical stabilization policies to fine tune the business cycle. Yet, despite impressive advances in the economic theory and econometric techniques, there are no definitive answers on the systematic stance policymakers should follow, and on the effects of macroeconomic policies upon the economy. Against this background, the present thesis attempts to inspect the interrelations between macroeconomic policies and the economic activity from novel angles. Three contributions are proposed. In the first Chapter, I show that relying on the information actually available to policymakers when budgetary decisions are taken is of fundamental importance for the assessment of the cyclical stance of governments. In the second, I explore whether the effectiveness of fiscal shocks in spurring the economic activity has declined since the beginning of the 1970s. In the third, the impact of systematic monetary policies over U.S. industrial sectors is investigated. In the existing literature, empirical assessments of the historical stance of policymakers over the economic cycle have been mainly drawn from the estimation of "reduced-form" policy reaction functions (see in particular Taylor (1993) and Galì and Perotti (2003)). Such rules typically relate a policy instrument (a reference short-term interest rate or an indicator of discretionary fiscal policy) to a set of explanatory variables (notably inflation, the output gap and the debt-GDP ratio, as long as fiscal policy is concerned). Although these policy rules can be seen as simple approximations of what derived from an explicit optimization problem solved by social planners (see Kollmann (2007)), they received considerable attention since they proved to track the behavior of central banks and fiscal policymakers relatively well. Typically, revised data, i.e. observations available to the econometrician when the study is carried out, are used in the estimation of such policy reaction functions. However, data available in "real-time" to policymakers may end up to be remarkably different from what it is observed ex-post. Orphanides (2001), in an innovative and thought-provoking paper on the U.S. monetary policy, challenged the way policy evaluation was conducted that far by showing that unrealistic assumptions about the timeliness of data availability may yield misleading descriptions of historical policy. In the spirit of Orphanides (2001), in the first Chapter of this thesis I reconsider how the intentional cyclical stance of fiscal authorities should be assessed. Importantly, in the framework of fiscal policy rules, not only variables such as potential output and the output gap are subject to measurement errors, but also the main discretionary "operating instrument" in the hands of governments: the structural budget balance, i.e. the headline government balance net of the effects due to automatic stabilizers. In fact, the actual realization of planned fiscal measures may depend on several factors (such as the growth rate of GDP, the implementation lags that often follow the adoption of many policy measures, and others more) outside the direct and full control of fiscal authorities. Hence, there might be sizeable differences between discretionary fiscal measures as planned in the past and what it is observed ex-post. To be noted, this does not apply to monetary policy since central bankers can control their operating interest rates with great accuracy. When the historical behavior of fiscal authorities is analyzed from a real-time perspective, it emerges that the intentional stance has been counter-cyclical, especially during expansions, in the main OECD countries throughout the last thirteen years. This is at odds with findings based on revised data, generally pointing to pro-cyclicality (see for example Gavin and Perotti (1997)). It is shown that empirical correlations among revision errors and other second-order moments allow to predict the size and the sign of the bias incurred in estimating the intentional stance of the policy when revised data are (mistakenly) used. It addition, formal tests, based on a refinement of Hansen (1999), do not reject the hypothesis that the intentional reaction of fiscal policy to the cycle is characterized by two regimes: one counter-cyclical, when output is above its potential level, and the other acyclical, in the opposite case. On the contrary, the use of revised data does not allow to identify any threshold effect. The second and third Chapters of this thesis are devoted to the exploration of the impact of fiscal and monetary policies upon the economy. Over the last years, two approaches have been mainly followed by practitioners for the estimation of the effects of macroeconomic policies on the real activity. On the one hand, calibrated and estimated DSGE models allow to trace out the economy’s responses to policy disturbances within an analytical framework derived from solid microeconomic foundations. On the other, vector autoregressive (VAR) models continue to be largely used since they have proved to fit macro data particularly well, albeit they cannot fully serve to inspect structural interrelations among economic variables. Yet, the typical DSGE and VAR models are designed to handle a limited number of variables and are not suitable to address economic questions potentially involving a large amount of information. In a DSGE framework, in fact, identifying aggregate shocks and their propagation mechanism under a plausible set of theoretical restrictions becomes a thorny issue when many variables are considered. As for VARs, estimation problems may arise when models are specified in a large number of indicators (although latest contributions suggest that large-scale Bayesian VARs perform surprisingly well in forecasting. See in particular Banbura, Giannone and Reichlin (2007)). As a consequence, the growing popularity of factor models as effective econometric tools allowing to summarize in a parsimonious and flexible manner large amounts of information may be explained not only by their usefulness in deriving business cycle indicators and forecasting (see for example Reichlin (2002) and D’Agostino and Giannone (2006)), but also, due to recent developments, by their ability in evaluating the response of economic systems to identified structural shocks (see Giannone, Reichlin and Sala (2002) and Forni, Giannone, Lippi and Reichlin (2007)). Parallelly, some attempts have been made to combine the rigor of DSGE models and the tractability of VAR ones, with the advantages of factor analysis (see Boivin and Giannoni (2006) and Bernanke, Boivin and Eliasz (2005)). The second Chapter of this thesis, based on a joint work with Agnès Bénassy-Quéré, presents an original study combining factor and VAR analysis in an encompassing framework, to investigate how "unexpected" and "unsystematic" variations in taxes and government spending feed through the economy in the home country and abroad. The domestic impact of fiscal shocks in Germany, the U.K. and the U.S. and cross-border fiscal spillovers from Germany to seven European economies is analyzed. In addition, the time evolution of domestic and cross-border tax and spending multipliers is explored. In fact, the way fiscal policy impacts on domestic and foreign economies depends on several factors, possibly changing over time. In particular, the presence of excess capacity, accommodating monetary policy, distortionary taxation and liquidity constrained consumers, plays a prominent role in affecting how fiscal policies stimulate the economic activity in the home country. The impact on foreign output crucially depends on the importance of trade links, on real exchange rates and, in a monetary union, on the sensitiveness of foreign economies to the common interest rate. It is well documented that the last thirty years have witnessed frequent changes in the economic environment. For instance, in most OECD countries, the monetary policy stance became less accommodating in the 1980s compared to the 1970s, and more accommodating again in the late 1990s and early 2000s. Moreover, financial markets have been heavily deregulated. Hence, fiscal policy might have lost (or gained) power as a stimulating tool in the hands of policymakers. Importantly, the issue of cross-border transmission of fiscal policy decisions is of the utmost relevance in the framework of the European Monetary Union and this explains why the debate on fiscal policy coordination has received so much attention since the adoption of the single currency (see Ahearne, Sapir and Véron (2006) and European Commission (2006)). It is found that over the period 1971 to 2004 tax shocks have generally been more effective in spurring domestic output than government spending shocks. Interestingly, the inclusion of common factors representing global economic phenomena yields to smaller multipliers reconciling, at least for the U.K., the evidence from large-scale macroeconomic models, generally finding feeble multipliers (see e.g. European Commission’s QUEST model), with the one from a prototypical structural VAR pointing to stronger effects of fiscal policy. When the estimation is performed recursively over samples of seventeen years of data, it emerges that GDP multipliers have dropped drastically from early 1990s on, especially in Germany (tax shocks) and in the U.S. (both tax and government spending shocks). Moreover, the conduct of fiscal policy seems to have become less erratic, as documented by a lower variance of fiscal shocks over time, and this might contribute to explain why business cycles have shown less volatility in the countries under examination. Expansionary fiscal policies in Germany do not generally have beggar-thy-neighbor effects on other European countries. In particular, our results suggest that tax multipliers have been positive but vanishing for neighboring countries (France, Italy, the Netherlands, Belgium and Austria), weak and mostly not significant for more remote ones (the U.K. and Spain). Cross-border government spending multipliers are found to be monotonically weak for all the subsamples considered. Overall these findings suggest that fiscal "surprises", in the form of unexpected reductions in taxation and expansions in government consumption and investment, have become progressively less successful in stimulating the economic activity at the domestic level, indicating that, in the framework of the European Monetary Union, policymakers can only marginally rely on this discretionary instrument as a substitute for national monetary policies. The objective of the third chapter is to inspect the role of monetary policy in the U.S. business cycle. In particular, the effects of "systematic" monetary policies upon several industrial sectors is investigated. The focus is on the systematic, or endogenous, component of monetary policy (i.e. the one which is related to the economic activity in a stable and predictable way), for three main reasons. First, endogenous monetary policies are likely to have sizeable real effects, if agents’ expectations are not perfectly rational and if there are some nominal and real frictions in a market. Second, as widely documented, the variability of the monetary instrument and of the main macro variables is only marginally explained by monetary "shocks", defined as unexpected and exogenous variations in monetary conditions. Third, monetary shocks can be simply interpreted as measurement errors (see Christiano, Eichenbaum and Evans (1998)). Hence, the systematic component of monetary policy is likely to have played a fundamental role in affecting business cycle fluctuations. The strategy to isolate the impact of systematic policies relies on a counterfactual experiment, within a (calibrated or estimated) macroeconomic model. As a first step, a macroeconomic shock to which monetary policy is likely to respond should be selected, and its effects upon the economy simulated. Then, the impact of such shock should be evaluated under a “policy-inactive” scenario, assuming that the central bank does not respond to it. Finally, by comparing the responses of the variables of interest under these two scenarios, some evidence on the sensitivity of the economic system to the endogenous component of the policy can be drawn (see Bernanke, Gertler and Watson (1997)). Such kind of exercise is first proposed within a stylized DSGE model, where the analytical solution of the model can be derived. However, as argued, large-scale multi-sector DSGE models can be solved only numerically, thus implying that the proposed experiment cannot be carried out. Moreover, the estimation of DSGE models becomes a thorny issue when many variables are incorporated (see Canova and Sala (2007)). For these arguments, a less “structural”, but more tractable, approach is followed, where a minimal amount of identifying restrictions is imposed. In particular, a factor model econometric approach is adopted (see in particular Giannone, Reichlin and Sala (2002) and Forni, Giannone, Lippi and Reichlin (2007)). In this framework, I develop a technique to perform the counterfactual experiment needed to assess the impact of systematic monetary policies. It is found that 2 and 3-digit SIC U.S. industries are characterized by very heterogeneous degrees of sensitivity to the endogenous component of the policy. Notably, the industries showing the strongest sensitivities are the ones producing durable goods and metallic materials. Non-durable good producers, food, textile and lumber producing industries are the least affected. In addition, it is highlighted that industrial sectors adjusting prices relatively infrequently are the most "vulnerable" ones. In fact, firms in this group are likely to increase quantities, rather than prices, following a shock positively hitting the economy. Finally, it emerges that sectors characterized by a higher recourse to external sources to finance investments, and sectors investing relatively more in new plants and machineries, are the most affected by endogenous monetary actions.

This dissertation consists of three papers revolving around economics of R&amp / D. The first paper analyzes the determinants of R&amp / D expenditures with specific focus on foreign ownership and spillovers / the second paper studies the impact of R&amp / D on productivity and the third paper analyzes whether conducting R&amp / D enables Turkish manufacturing firms to catch up with sector leaders as far as their productivity levels are concerned. The first contribution of the thesis is the use of newly available data from Turkish Institute of Statistics (Turkstat). Two different surveys are matched at the firm level for the years 2003-2007. The second contribution is the employment of a new methodology: Heckman two-stage procedure with instrumental variables for panel data. The third contribution is collection of qualitative data via interviews with R&amp / D performing firms. Foreign ownership has no statistically significant effect on R&amp / D intensity. Foreign knowledge spillovers exert a negative effect on R&amp / D, but in time their effect becomes positive. R&amp / D subsidies and skill affect R&amp / D intensity positively while size influences it negatively. The effect of R&amp / D and skill on productivity is positive and significant. The effect of R&amp / D on technical efficiency is negative but knowledge spillovers exert a positive effect on technical efficiency.

Organized Industrial Zones (OIZs) are used as a main and important industry policy tool in Turkey. In 2012, the number of OIZs is 263 with 148 active and 115 planned ones. Network between the firms reveal the knowledge spillovers which is inevitable for economic growth of a country for neo-classical economists. In this thesis, existence of intra-OIZ and intra-industry knowledge spillovers in Ankara and Istanbul is tested by the help of an export decision function. As it considers the spatial dependence between the regional units the spatial econometric method is preferred for the analysis. The data set is taken from the &ldquo / Field Research Survey&rdquo / of Small and Medium Enterprises Development Organization (SMEDO). It consists of 62,137 firm level observations from 24 manufacturing industries in 81 provinces between 2004 and 2007. After the cleaning process of the data, 1545 and 1172 observations are left for Ankara and Istanbul, respectively. The results show that the size of the firm (which is proxied by logarithm of total labor), technology (which is proxied by computer usage), organizational proximity and foreign language knowledge of the administrator are the common determinants of export decision for Ankara and Istanbul for both intra-IOZ and intra-industry relations when spatial dependence is not ignored. Besides these variables, in Ankara percentage of high skilled labor is significant while in Istanbul cluster proximity is significant. Moreover, for Ankara while for intra-OIZ relations the spatial effect is one third of the total effect, it is one fourth of the total effect for intra-industry relation. For Istanbul one fourth of the total effect is from spatial effects for both intra-OIZ and intra-industry relations.

Since the 1990s and the Swedish membership in the European Union in 1995, the presence of Multinational Enterprises (MNEs) has increased radically in the Swedish economy. The objective with this study is to analyze MNEs effects in different regions within the Swedish manufacturing industry in terms of productivity. Is a region with more MNEs, more pro-ductive than a region with a lower share of MNEs? The theory claims that productivity spillovers of MNEs occurs through three channels namely, via R&D, increased competi-tion and transmission of technology. By observing 81 regions which consists of all 290 municipals in Sweden and taking the average value of productivity and the explanatory variables trough 1997-2004, a cross-sectional analysis is conducted. The results evidently showed signs of productivity spillovers of MNEs on local firms in the manufacturing in-dustry. Findings suggest that (1) a regions with higher share of MNEs did face a higher re-gional productivity. However the spillovers was not successfully absorbed by regions with a industry structure that was not dominated by a the manufacturing industry. (2) Larger re-gions, in terms of population, tend to show a lower productivity level compared to the av-erage levels of the rest of the regions, since their structure was dominated by the service sector. (3) Regions with small technological difference compared to the MNEs, tends to hold the skills and knowledge needed to efficiently exploit the productivity spillovers, hence MNEs influence on regional productivity was greater in these regions than regions with a lower level of technical capability.

This thesis analyses the effect of FDI induced technology transfer and spillover on economic growth in the CEE countries and the Baltic States. We develop a framework were FDI and R&D are seen as sources of technological progress (A). Transition economies, due to the need to catch up quickly with more advanced economies, rely on FDI as a major channel through which they can tap the needed technology. Whether or not technology spills over to the entire economy depends on the ability of the countries to diffuse the advanced technology transferred by FDI. We test using panel data analysis, if FDI alone can spur growth or whether the FDI induced technology spillover effect is enhanced by the level of R&D. Empirical evidence is found that FDI and R&D as an interaction term have helped the CEE countries and the Baltic States to accelerate growth by modernizing the economy through an upgrading process.

Coesione e competitività sono i principali obiettivi della politica regionale Europea. È però possibile che investimenti in competitività possano beneficiare maggiormente le regioni più sviluppate, a discapito della coesione. Si tratta di una contraddizione? In questo lavoro si risponde a questa domanda approfondendo tre argomenti. Il primo riguarda le determinanti della crescita regionale. Il secondo interessa il ruolo degli spillover di conoscenza per l’innovazione regionale. Il terzo è relativo al contributo delle infrastrutture di conoscenza all’attività innovativa regionale. I principali risultati possono essere sintetizzati in questa maniera. Una più alta crescita nella regioni meno sviluppate è importante ma non sufficiente a garantire convergenza. La crescita, nel lungo periodo, è determinata dagli investimenti in conoscenza, che producono rendimenti crescenti. La mancanza di sviluppo nelle regioni più arretrate può essere attribuita a questi divari di conoscenza, non sempre facili da colmare. Le esternalità alla base dei rendimenti crescenti sono estremamente localizzate e non si diffondono facilmente nelle economie. D’altra parte la conoscenza non si produce solamente con investimenti in ricerca. La promozione della ristrutturazione economica regionale verso modelli basati sulla conoscenza dovrebbe dedicare particolare attenzione alle fonti esterne di conoscenza, quali, accanto alle università, i servizi ad alto contenuto di conoscenza. / Cohesion and competitiveness are the two main objectives of the EU regional policy. It seems however that improving competitiveness will benefit developed regions more, implying a less cohesive Europe. Is that a contradiction? This work answers this question by studying three related topics. The first concerns the determinants of regional growth in Europe. The second is about the importance of interregional knowledge spillovers for the regional innovative activity. The third is related to the way knowledge infrastructures can shape regional innovative activity. The main results can be summarized as follows. The higher growth in least developed region is important but not sufficient to catch-up. Growth, in the long-run, is determined by investments in knowledge, which produce increasing returns. The lack of development of lagging regions could be accordingly ascribed to the existence of knowledge gaps which are not as easy to be filled. Knowledge externalities, the essence of the more than proportional returns, are extremely localized and do not necessarily spread across the economies. However knowledge is not only produced through R&D. The promotion of economic restructuring of lagging regions toward a knowledge-based economy should deserve special attention to external knowledge sources like, alongside universities, Knowledge Intensive Business Services.

Knowledge, learning, and innovation are vital elements in facilitating economic development and growth. Technological change, which is a synonym for generating knowledge, the diffusion thereof, and subsequent application in the marketplace in the form of novel products and processes, i.e. innovations, has a strong effect on the collective wealth of regions and nations. Knowledge spillovers, which are unintended knowledge flows that take place among spatial (geography) and sectoral (industry) units of observation, provide a rationale for diverging growth rates among spatial units, well beyond what might be explained by variations in jurisdictional factor endowments, and thus are of particular interest in this context. Measuring and quantifying the creation and diffusion of knowledge has proven to be a challenging endeavor. One way to capture technical and economically valuable knowledge is by means of patent and patent citation analysis. Following this approach, and utilizing a novel patent database that has been specifically developed for this purpose, the present dissertation investigates the spatio-sectoral patterns of knowledge spillovers in the Canadian economy over the time period 1983 to 2007. The employed research methodology addresses existing limitations in this stream of research, and contributes to the continuing debate regarding the significance of sectoral specialization versus diversity, and local versus non-local knowledge spillovers as the main driver of knowledge formation processes leading to innovation at the sub-regional scale. The findings indicate that knowledge spillovers are localized, and furthermore, that this localization effect has increased over time for both spillovers within a particular industry, as well as between industry sectors. The analysis of micro-geographic industry specific spatio-sectoral knowledge formation processes, and the inquiry into local sectoral knowledge spillover patterns, outlines how regional evolutionary technology trajectories potentially shape the rate and direction of technological change, and consequently influence economic growth, at a particular place.

The objective of this dissertation is to develop a model to examine the concept of a “worldwide” tax burden. The notion is that due to differential mobility of factors developed nations may be passing on a share of their tax burden to less developed countries while effectively indulging in a form of tax competition. This is important for many reasons especially since it may affect the distribution of income between countries, and influence the flow of capital. As globalization increases, “the race to the bottom” in taxation (which implies tax-cutting) suggests that these spillovers should be reduced over time. The traditional view of taxation implies that taxation imposes an excess burden and increasing most types of taxes will increase this burden. But for whom does this burden increase? Are developed countries passing on a burden to locations that are less able to shift the burden forward? If this phenomenon of tax spillovers can be quantified, we can examine the extent and nature of shifting of the tax burden. Using a version of the famous general equilibrium model first developed by Prof Harberger in 1962, we analyze the extent of tax spillovers in the presence of a public input in an open economy setting. We model two different taxes, the Capital Income Tax and a Consumption Tax and two different types of expenditure patterns, a government input and a transfer payment. The dissertation answers the following research questions: • Can the extent of tax spillovers be quantified using a general equilibrium model that is not dependent on functional forms? • Does the extent of spillovers depend on the type of tax used? • Does the extent of spillovers depend on the use to which the taxes are put? • What are the policy implications? We find that the tax cutting economy can gain from cutting a distorting tax only when the expenditure pattern is neutral, while imposing a cost to the rest of the world in terms of sources and uses of GDP. When revenues are used to provide productive public goods; neither country gains from tax cuts that lower inputs.

Knowledge, learning, and innovation are vital elements in facilitating economic development and growth. Technological change, which is a synonym for generating knowledge, the diffusion thereof, and subsequent application in the marketplace in the form of novel products and processes, i.e. innovations, has a strong effect on the collective wealth of regions and nations. Knowledge spillovers, which are unintended knowledge flows that take place among spatial (geography) and sectoral (industry) units of observation, provide a rationale for diverging growth rates among spatial units, well beyond what might be explained by variations in jurisdictional factor endowments, and thus are of particular interest in this context. Measuring and quantifying the creation and diffusion of knowledge has proven to be a challenging endeavor. One way to capture technical and economically valuable knowledge is by means of patent and patent citation analysis. Following this approach, and utilizing a novel patent database that has been specifically developed for this purpose, the present dissertation investigates the spatio-sectoral patterns of knowledge spillovers in the Canadian economy over the time period 1983 to 2007. The employed research methodology addresses existing limitations in this stream of research, and contributes to the continuing debate regarding the significance of sectoral specialization versus diversity, and local versus non-local knowledge spillovers as the main driver of knowledge formation processes leading to innovation at the sub-regional scale. The findings indicate that knowledge spillovers are localized, and furthermore, that this localization effect has increased over time for both spillovers within a particular industry, as well as between industry sectors. The analysis of micro-geographic industry specific spatio-sectoral knowledge formation processes, and the inquiry into local sectoral knowledge spillover patterns, outlines how regional evolutionary technology trajectories potentially shape the rate and direction of technological change, and consequently influence economic growth, at a particular place.