NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Paulo Santos

Department of Economics
Monash University
Building 11 E Clayton
Victoria 3800 Australia

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: Monash University

NBER Working Papers and Publications

November 2017Heterogeneous Wealth Dynamics: On the Roles of Risk and Ability
with Christopher B. Barrett
in The Economics of Poverty Traps, Christopher B. Barrett, Michael R. Carter, and Jean-Paul Chavas, editors
We study the causal mechanisms behind persistent poverty. Using original data on Boran pastoralists of southern Ethiopia, we find that nonlinear wealth dynamics arise purely due to shocks. In favorable states of nature, expected herd growth is linear and universal. We further show that ability to deal with shocks matters. Multiple stable equilibria characterize the wealth dynamics of herders of higher ability, while those with lower ability converge to a unique equilibrium at a small herd size.
September 2016Heterogeneous Wealth Dynamics: On the Roles of Risk and Ability
with Christopher B. Barrett: w22626
This paper studies the causal mechanisms behind persistent poverty. Using original data on Boran pastoralists of southern Ethiopia, we find that heterogeneous and nonlinear wealth dynamics arise purely in adverse states of nature. In favorable states, expected herd grow is quasi-linear and universal. We further show that those with lower herding ability, as reflected in past herd growth data, converge to a unique equilibrium at a small herd size while those with higher ability exhibit multiple stable dynamic wealth equilibria.
 
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