Publication at Faculty of Social Sciences, Faculty of Mathematics and Physics, Centre for Economic Research and Graduate Education |
2005
Abstract
We consider the effects of global sunspot fluctuations in a growth model with externalities, where the Pareto-inferior steady state (poverty trap) is indeterminate. We study the stochastic stability of the poverty trap steady state subject to sunspot fluctuations, and demonstrate an approximate method of estimating escape probability as a function of initial conditions and the model's parameters