Describe some setting (other than the calorie poverty trap) where there may be multiple equilibria that you think is relevant to economic development.

These types of issues are equally as important for micro and macro settings, so you should feel free to focus a setting that you care about. Essentially, you would have to 1. Describe the theory (in words or math) underlying bank runs (Please use the attached Diamond and Dybvig Paper) 2. Pick a specific place and describe the economic environment. What in the data suggests that the poverty trap actually might exist? What type of analysis would you need to undertake? You do not need to analyze your own data (although of course it is encouraged), but you should at least find relevant empirical research (Please use the example of great depression or you can come up with own historical precedent example but please make sure that the bank failure is caused by self-fulfilling prophecy aspect and not due to an actual liquidity crisis like the example of the bank Northern rock) 3. You should be able to do simulations on the computer: take your formal model of the specific environment you are studying, plugging the relevant values from the data, and then seeing if there is in fact scope for a poverty trap. (Graphical interpretation of Diamond Dybvig model along with a simple quadrant of game theory should be sufficient) 4. Discuss if there a realistic role for policies that could make everyone better off. (Deposit Insurance and Suspension of convertibility are potential solutions discussed in the attache D&D paper but please do state that Deposit insurance method is more efficient ex)FDIC) Thank you