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Poverty, Voracity, and Growth

  • Strulik, Holger

This article investigates economic performance when enforceable property rights are missing and basic needs matter for consumption. It suggests a new view of the so-called voracity effect according to which windfall gains in productivity induce behavior that leads to lower economic growth. Taking into account that the rate of intertemporal substitution in consumption depends on the level of consumption, it is shown that "voracious behavior" is situation-specific. It occurs when an economy is in decline and suffciently close to stagnation.

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File URL: http://diskussionspapiere.wiwi.uni-hannover.de/pdf_bib/dp-473.pdf
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Paper provided by Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät in its series Hannover Economic Papers (HEP) with number dp-473.

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Length: 21 pages
Date of creation: May 2011
Date of revision:
Handle: RePEc:han:dpaper:dp-473
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  1. Easterly, William & Levine, Ross, 2003. "Tropics, germs, and crops: how endowments influence economic development," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 3-39, January.
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