ABSTRACT
So far we have limited ourselves to modelling the impacts of monetary and fiscal policies in a two-country framework. These models have left us with a number of theoretical expectations about the impacts; in this chapter we try to review the econometric evidence on impacts to see whether the theoretical predictions are confirmed or otherwise. The chapters to date have drawn attention to the complexities associated with modelling the open economy; the results of our theoretical models are, inevitably, drawn from models which are admittedly relatively simple, so we should not expect a perfect correspondence between theoretical expectations and econometric results. Nevertheless, we can at least hope that the models are able to provide some insights into the actual transmission of policies across large countries.
