Motivated by the process of economic development in Eastern Germany since the German reunification we set up a dynamic macroeconomic model of a small open economy where both capital and labor are mobile and there are increasing returns to scale at the aggregate level. The model features multiple...

The main challenge that OCTs face consists in putting their economies and societies on a sustainable development path by increasing their competitiveness, reducing their vulnerability to external shocks, increasing environmental resilience, cooperating with their neighbours and, where possible,...