In this paper, we develop a simple multi-technology overlapping generations model that exhibits a wide variety of economic development patterns. In particular, our numerical simulations demonstrate that for a given set of parameter values, various types of development patterns such as the middle-income trap, the poverty trap, periodic or chaotic fluctuations, and high-income paths can coexist, and which pattern is realized depends only on the initial value of capital. For another set of parameter values, we show that, due to the pinball effect, an economy starting at a middle-income level can take off to the high-income state or get caught in the poverty trap in a seemingly random way after undergoing transient chaotic motions. Our results can explain observed complicated patterns of economic development in a unified manner.
Funding source: Kyoto University, Institute of Economic Research
Funding source: Japan Society for the Promotion of Science
Award Identifier / Grant number: 17K03806
Award Identifier / Grant number: 20H01507
Award Identifier / Grant number: 20H05631
Award Identifier / Grant number: 20K01745
Award Identifier / Grant number: 21K01388
The authors would like to thank Prof. Yoshiyasu Ono, seminar participants at Osaka University and an anonymous referee for their helpful comments. We also thank Dr. Satoko Asano for her assistance.
Author contributions: All the authors have accepted responsibility for the entire content of this submitted manuscript and approved submission.
Research funding: This research was financially supported by International Joint Research Center of Advanced Economic Research of KIER and the Grants-in-Aid for Scientific Research, JSPS (17K03806, 20H05631, 20K01745, 20H01507, and 21K01388).
Conflict of interest statement: The authors declare no conflicts of interest regarding this article.
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