This paper analyses how technological progress embodied in capital goods raises productivity and income, while at the same time it can modify the allocation of consumption, investment and the capital stock. With capital-embodied technological progress, new capital goods become more productive,...

The EU candidate and potential candidate countries have made considerable progress in economic transition and integration into the world economy within less than two decades. Nevertheless, gaps in terms of income per capita relative to the euro area remain large. This suggests that the...