Quotation Kiener, Richard. 2010. The Economic Dynamic of the Poverty Trap as Markov-Decision-Process. 1st Annual Conference of the International Society for Integrated Disaster Risk Management - IDRiM 2010, Wien, Österreich, 01.09-04.09..


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Abstract

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.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Paper presented at an academic conference or symposium
Language English
Title The Economic Dynamic of the Poverty Trap as Markov-Decision-Process
Event 1st Annual Conference of the International Society for Integrated Disaster Risk Management - IDRiM 2010
Year 2010
Date 01.09-04.09.
Country Austria
Location Wien

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People
Kiener, Richard (Details)
Organization
Finance, Accounting and Statistics DP (Details)
Institute for Finance, Banking and Insurance IN (Details)
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