For about a decade, GDP growth in Central European countries has been consistently faster than in the 'old' EU-15. As a first approximation, one can expect a growth differential of about 2 percentage points to prevail also in the future. This practical rule-of-thumb is broadly consistent with...

The substantial within-industry variation in firm productivity typically observed in the data suggests that there is ample scope for catch-up by laggard firms. We analyse the normative effects of such catch-up. In the short run, where firms’ process technologies are fixed, catch-up can reduce...