The Economic Dynamic of the Poverty Trap as Markov-Decision-Process

  • Richard Kiener (Redner*in)

Aktivität: VortragWissenschaftlicher Vortrag (Science-to-Science)


This work bases on my master thesis, which was supervised by o. Univ.-Prof. Mag. Dr. Georg Pflug. First of all, we know that a
poverty trap is a well-known growth problem in economics. In my
research I focus on such a growth problem.
I firstly design a stochastic dynamic model of an economy in which
disasters like an earthquake can appear. The model in this work belongs
to a certain type of model, named Ramsey Model. Time is discrete.
The modeled household is in a game-situation against nature,
that's why all its decisions have a direct influence on its own welfare.
The capital stock, which is the solution for the decision problem of the household, determines whether a household is poor or non-poor. Furthermore, in case of disaster a part of this capital stock gets destroyed.
I further assume that an insurance or the government replaces a rate of the damage. This rate is exogenous. The other exogenous variables of the model are the personal abilities of the household, its initial capital stock and the fixed costs of the technology like a licence fee.
In my model a poverty trap can generally appear. The main question
of my work is, what is the influence of the exogenous variables on
the existence of a poverty trap. To answer all this the investment behaviour of the households gets numerically calculated with the Value Function Iteration method.
Zeitraum1 Sept. 20104 Sept. 2010
Ereignistitel1st Annual Conference of the International Society for Integrated Disaster Risk Management - IDRiM 2010
VeranstaltungstypKeine Angaben