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Decisions in Economics and Finance

, Volume 41, Issue 2, pp 145–162 | Cite as

Poverty trap, boom and bust periods and growth. A nonlinear model for non-developed and developing countries

  • Francesca GrassettiEmail author
  • Cristiana Mammana
  • Elisabetta Michetti
Article

Abstract

This work investigates the qualitative and quantitative dynamics of a Solow–Swan growth model with differential savings as proposed by Böhm and Kaas (J Econ Dyn Control 24:965–980, 2000) assuming the shifted Cobb–Douglas (SCD) production function (see Capasso et al. in Nonlinear Anal. 11:3858–3876, 2010) which makes it possible to consider the long-run dynamics of non-developed and developing countries as well as that of developed economies. The resulting model is described by a nonlinear discontinuous map generating both a poverty trap and complex dynamics. Furthermore, multistability phenomena may emerge: besides the “vicious circle of poverty”, long-run behaviours may include boom and bust periods. Complex basins can emerge, hence, economic policies trying to raise the capital per capita may fail and economies may be captured by the poverty trap.

Keywords

Solow model Poverty trap Growth dynamics Multistability Discontinuous map 

JEL Classification

C61 C62 E2 O1 O4 

Notes

Acknowledgements

The authors wish to thank the Editor and the two anonymous Referees for their valuable comments and suggestions.

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Copyright information

© Associazione per la Matematica Applicata alle Scienze Economiche e Sociali (AMASES) 2018

Authors and Affiliations

  1. 1.Department of Economics and LawUniversity of MacerataMacerataItaly

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