Bond, Eric W.; Iwasa, Kazumichi; Nishimura, Kazuo - Institute of Economic Research, Kyoto University - 2011
We extend the dynamic Heckscher-Ohlin model in Bond et al. (2009) and show that if the labor intensive good is inferior, then there may exist multiple steady states in autarky and poverty trap can arise. Poverty traps for the world economy, in the form of Pareto dominated steady states, are also...