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
3.Is it important to distinguish short run and long