The authors examine the empirical evidence in support of the poverty trap view of underdevelopment. They calibrate … simple aggregate growth models in which poverty traps can arise due to either low saving or low technology at low levels of … development. They then use these models to assess the empirical relevance of poverty traps and their consequences for policy. The …

incidence analysis suggests that increased spending on social assistance enhances the probability of moving out of poverty and … reduces the probability of moving into poverty. However, double difference estimates (based on a mimicked randomized … household welfare or reduce poverty. Double difference estimates point to a negative impact on welfare. Parametric estimates do …

The authors develop a macroeconomic framework that captures links between aid, public investment, growth, and poverty … impact of policy shocks on poverty by linking the model to a household survey. They calibrate the model for Ethiopia and … should increase to reach the poverty targets of the Millennium Development Goals. …