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Rich Nations, Poor Nations: How much can multiple equilibria explain?

  • Graham, Bryan S.

    (Harvard University)

  • Jonathan Temple

    (University of Bristol)

The idea that income differences between rich and poor nations arise through multiple equilibria or 'poverty traps' is as intuitive as it is difficult to verify. In this paper, we explore the empirical relevance of such models. We calibrate a simple two sector model for 127 countries, and use the results to analyze the international prevalence of poverty traps and their consequences for productivity. We also examine the possible effects of multiplicity on the world distribution of income, and identify events in the data that may correspond to equilibrium switching.

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Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2002 with number 91.

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Date of creation: 29 Aug 2002
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Handle: RePEc:ecj:ac2002:91
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