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Low-Level Equilibrium and Fractional Poverty Traps

  • Hong Fu
  • Calum G. Turvey
Chapter

Abstract

This chapter delves further into the problem of growth theory and what has previously been referred to as low- or high-level equilibrium traps. It is a technical chapter in the sense that we develop a conceptual model that links population, land, output, innovation, and uncertainty in a dynamic and stochastic way. We then establish some initial conditions and calibrations based on data available for Shandong and Hebei, and use Monte Carlo methods to run the model over a 500-year period intended to mimic the years 1400 through 1900. We argue that when risk is explicitly entered into a classical growth model, the resulting dynamics are highly fractional. This leads us to consider the idea of fractional poverty traps.

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Hong Fu
    • 1
  • Calum G. Turvey
    • 2
  1. 1.Shandong University of Finance and EconomicsJinanChina
  2. 2.Cornell UniversityIthacaUSA

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