Technology Choice, Externalities in Production, and a Chaotic Middle-Income Trap

Takao Asano (), Akihisa Shibata and Masanori Yokoo ()
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Takao Asano: Okayama University
Masanori Yokoo: Okayama University

No 1090, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: We incorporate the external effects of capital in production and endogenous technology choice into the standard overlapping generations model. We demonstrate that our model can exhibit a poverty trap, a middle-income trap, and perpetual growth paths. We also show that, under some economic conditions, an economy exhibits all three of these phenomena, depending on its initial capital level, and that the economy caught in the middle-income trap can exhibit chaotic fluctuations in the long run. In obtaining these results in the standard overlapping generations model, the combination of technology choice and externalities in production plays a crucial role.

Keywords: External effect; Technology choice; Overlapping generations model, Middle-income trap; Chaos (search for similar items in EconPapers)
Pages: 46 pages
Date: 2023-01
New Economics Papers: this item is included in nep-dcm, nep-dge and nep-gro
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Related works:
Journal Article: Technology choice, externalities in production, and a chaotic middle-income trap (2024)
Working Paper: Technology Choice, Externalities in Production, and Chaotic Middle-Income Traps (2022)
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