Poverty traps model: anti- poverty policy Suppose we have the standard S-shaped poverty traps model, and the poverty line is (i) below, (ii) at, and (iii) above, the (middle, unstable) threshold....

Topic:

Economics

Poverty traps model: anti- poverty policy

Suppose we have the standard S-shaped poverty traps model, and the poverty line is (i) below, (ii) at, and (iii) above, the (middle, unstable) threshold.

 

Suppose that individuals are uniformly distributed

across all asset levels.

1.What is the cheapest strategy to reduce poverty by 1 (who to target)?

2.Suppose the government has a fixed amount of

money to reduce poverty. What is the most cost

effective strategy?

 

3.Is it important to distinguish short run and long

run?

 

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