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Abstract.  The paper analyses the population dynamics of a country that has two ethnic groups, a minority and a majority, and minority members can choose to assimilate into the majority. Depending on the minority's size, the long‐run outcome can be full or no assimilation. Under certain parameter values multiple equilibria exist, including the two extreme cases. The paper demonstrates that both the long‐run outcome and the equilibrium path may be inefficient. Two extensions to the basic model are considered. The first one allows for a comparison between a multicultural and a 'melting pot' society. The second one introduces population growth and studies the interplay between exogenous and endogenous changes in the minority's size. JEL classification: J110, J150, J180

AbstractThis paper views the growth and convergence process of five Central‐Eastern European economies between 1996 and 2019—the Czech Republic, Hungary, Poland, Slovenia and Slovakia—through the lens of an open economy, stochastic neoclassical growth model with simple financial frictions. Our main question is whether shocks to the growth rate of productivity ('trend') or shocks to the external interest premium are more important to understand the volatility of GDP growth and its components. We find that while GDP growth fluctuations can be traced back to productivity shocks, the composition of GDP—and consumption in particular—was driven particularly by premium shocks. Investment‐specific and labor market shocks are also important. Our panel estimation allows us to separate global and local components for the productivity‐trend and interest premium shocks. Results indicate that the global trend component is well approximated by the growth rate of the advanced European Union economies, and we also find tentative evidence that recent investment behavior is driven to a large extent by European Union funds.

The paper reexamines the empirical relationship between external indebtedness and the interest premium on government bonds. We use a broad sample of countries between 1980-2017 that includes advanced, emerging and less-developed economies. We show that the relationship is strongly state-dependent, and it varies both with the international financial climate, and with the level of development. Moreover, while we find some evidence for non-linearity, this is mostly driven by turbulent periods. We carry out a number of robustness exercises, which highlight issues related to sample composition, the choice of the debt measure, and the definition of crisis events.

The paper studies the labor share among countries of the European Union, with a particular attention to newer member states of Central and Eastern Europe (CEEU). After discussing methodological issues in the computation of the labor share, we present various stylized facts at the country level, and also for broad sectors within the aggregate economy. We find that CEEU countries typically have lower labor shares, both in the aggregate and at the sectoral level. Structural change, while quite pronounced among the CEEU economies, plays only a minor role in the evolution of the labor share. The exception is agriculture, which for some countries have a sizable impact on the level and dynamics of the labor share - partly because of important measurement problems. We also document links between productivity, the relative prices of consumption and investment, and the labor share. In particular, we find that a significant part of the difference in conventionally measured labor shares between the more developed EU countries and less developed CEEU countries can be attributed to differences in relative prices. We discuss possible explanations, and show that given reasonable assumptions, a simple two-sector model is able to account for the main findings.