• Table of Contents
    • Abstract
    • Keywords
    • Article
      • On the mechanics of poverty traps
      • Some models of poverty trap
        • Learning-by-doing externalities
        • Search externalities
        • Human capital externalities
        • Market size and division of labour
        • Financial developments
        • Low wealth/low investment
        • Demographic trap
        • Contagious social norms
        • Modelling inertia
      • Some cautionary remarks on interpretations
    • See Also
    • Bibliography
    • How to cite this article

poverty traps

Kiminori Matsuyama
From The New Palgrave Dictionary of Economics, Second Edition, 2008
Edited by Steven N. Durlauf and Lawrence E. Blume
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Abstract

A poverty trap is a self-perpetuating condition, in which an economy suffers from persistent underdevelopment, vicious circle of poverty, created by circular causation due to the presence of some external economies and/or strategic complementarities. We discuss the concept in a dynamic setting, and review some models of poverty traps in the literature. The policy prescriptions of such models should be treated with caution, since each model identifies one cause; but as many causes are likely to coexist, attempts to pull an economy out of one trap may push it into another.
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Keywords

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Article

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How to cite this article

Matsuyama, Kiminori. "poverty traps." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 14 December 2017 <http://www.dictionaryofeconomics.com/article?id=pde2008_P000332> doi:10.1057/9780230226203.1320

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