a characterization of erratic dynamics in the overlapping generations model abstract in this paper we characterize and give examples o wide classes of utility functions which generate erratic dynamics in the standard deterministic overlapping generations model erratic dynamics refers to feasible trajectories which are bounded but which do not converge to stationary points or periodic orbits we show that such trajectories are pareto efficient we introduce credit into the model and show how a constant credit expansion rate can result in erratic trajectories in prices and the real value of credit finally we briefly discuss certain technical aspects of the mathematics used and the statistical nature of the dynamics that can arise from deterministic dynamical systems

multiple equilibrium overnight rates in a dynamic interbank market game abstract we analyse a two period model of the interbank market i e the market where banks trade liquidity we assume that banks do not take the interbank interest rate as given but instead negotiate on interest rates and transaction volumes with each other the solution concept applied is the shapley value we show that there are a multiplicity of average equilibrium interest rates of the first period so that the average interest rate in this period does not convey any information on the expected liquidity situation on the interbank market as the banks control not only the transaction volumes but also the interest rates they can leave the interest rates constant and adjust the transaction volumes when for example a liquidity deficit becomes more likely

scale economies and input price elasticities in microfinance institutions abstract we evaluate the efficiency of microfinance institutions mfis using a structural approach which also captures these institutions outreach and sustainability objectives we estimate economies of scale and input price elasticities for lending only and deposit mobilizing mfis using a large sample of high quality panel data the results confirm conjectures that improvements in efficiency can come from the growth or consolidations of mfis as we find substantial increasing returns to scale for all but profitability focused deposit mobilizing mfis our results support the existence of a trade off between outreach and sustainability all inputs are inelastic substitutes but we find differences in own price elasticities in lending only and deposit mobilizing mfis

considering macroeconomic indicators in the food before fuel nexus abstract a structural vector autoregression svar model along with a direct acyclic graph is employed to decompose how supply demand structural shocks affect food and fuel markets the results support the hypothesis that fundamental market forces of demand and supply are the main drivers of food price volatility increased biofuel production may cause short run food price increases but not long run price shifts decentralized freely operating markets will mitigate the persistence of any price shocks and restore prices to their long run trends the main policy implications are that oil gasoline and ethanol market shocks do not spillover into grain prices which indicates no long run food before fuel issue in the short run grain prices can spike due to market shocks so programs designed to blunt these price spikes may be warranted

abolishing biofuel policies possible impacts on agricultural price levels price variability and global food security abstract in this paper we assess the impact of abolishing biofuel policies mandates tax credits import and export tariffs on agricultural price levels and price variability as well as some aspects related to global food security for the analysis we employ a recursive dynamic agricultural multi commodity model within a stochastic framework results of the 10 years forward looking scenario indicate that the removal of biofuel policies would have a significant effect on price variability of biofuels but only a marginal impact on the variability of agricultural commodity prices without biofuel policies global biofuel demand would decrease by 25 for ethanol and 32 for biodiesel moreover prices would only moderately decrease for ethanol feedstock commodities like wheat and coarse grains while prices for biodiesel feedstock commodities specifically vegetable oils would be more affected due to competing uses of crop production such as feed and industrial use abolishing biofuel policies would not necessarily lead to an increase in global food security as food use increases would remain low for most crops and regions

game theoretic methods in general equilibrium analysis list of figures list of authors introduction j f mertens a the core and the bargaining set i general equilibrium and cooperative games basic results e allen s sorin ii core convergence in perfectly competitive economies r m anderson iii economies with atoms j f mertens iv bargaining sets r vohra b the value v the shapley value r j aumann vi value of games with a continuum of players a neyman vii the tu value the non differentiable case j f mertens addendum the shapley value of a perfectly competitive market may not exist f lefevre viii the harsanyi value s hart ix value equivalence theorems the tu and ntu cases s hart x economic applications of the shapley value r j aumann c the cooperative approach to large markets and games xi an axiomatic approach to the equivalence phenomenon p dubey a neyman xii large games and economies with effective small groups m h wooders d the non cooperative approach xiii strategic market games a survey of some results p dubey xiv from nash to walras equilibrium e allen h polemarchakis xv correlated and communication equilibria j f mertens xvi notes on correlated equilibrium and sunspot equilibrium j peck xvii implementation with plain conversation s sorin

the sacrifices of micro borrowers in ghana a customer protection perspective on measuring over indebtedness this article measures the over indebtedness of micro borrowers it defines over indebtedness from a customer protection perspective based on the borrowers sacrifices we analyse the sacrifices borrowers experience and find that 30 per cent of borrowers are over indebted we then test risk management indicators of debt problems as predictors of over indebtedness over indebtedness is strongly related to delinquency and the debt to income ratio but not to debt amounts or to multiple borrowing although our model correctly predicts 72 6 per cent of cases even the best indicators identify only a few over indebted borrowers risk management is not enough to protect customers against over indebtedness but the industry needs to measure customer experiences directly

loan officers gender and microfinance repayment rates this study examines the impact of loan officer characteristics on repayment rates of microfinance borrowers in mexico applying multilevel analyses with special attention to the impact of the gender of the loan officer on default rates the results strongly suggest that loan officers play a crucial role in improving repayment rates in microfinance and that male loan officers are better able to induce borrowers to repay than female loan officers this may be because men exert authority over women and face fewer problems working late travelling through unsafe places and combining a position as counsellor with enforcing repayment

loan repayment performance in community development finance institutions in the uk this paper identifies the key institutional factors that influence loan loss rates in community development finance institutions in the uk traditional bank credit assessment puts the blame of poor loan performance largely on the borrower this is the first study of its kind to examine institutional characteristics of 16 cdfis in the uk and assess their influence on the loan loss rates the results show that 8 out of the 13 institutional characteristics examined significantly influence loan repayment performance although a vast body of literature supports the view that borrower characteristics are highly influential our results provide strong evidence to show that institutional characteristics are equally important and both factors need to be taken into account if loan repayment performance is to be improved

valuation equilibrium with clubs abstract this paper considers model worlds in which there is a continuum of individuals who form finite sized associations to undertake joint activities we show how through a suitable choice of commodity space restrictions on the composition of feasible groups can be incorporated into the specification of the consumption and production sets of the economy we also show that if there are a finite number of types then the classical results from the competitive analysis of convex finite agent economies can be reinterpreted to apply journal of economic literatureclassification numbers d51 h41

endogenous strategic business cycles this paper examines an overlapping generations version of the shapley shubik market game we show existence of equilibria for the simple one commodity model and analyze the dynamics of the equilibrium trajectories generated in the model because of the non linearities generated by strategic interaction of agents in the model we find that complex and chaotic equilibrium dynamics are possible in this model for a much broader range of preferences than those for which grandmont econometrica53 no 5 1995 995 1045 found complicated dynamics in the perfectly competitive version of this model these results then provide an alternative to the usual technology based explanation for the historical fact that business cycles became an important economic phenomenon only with the onset of industrialization journal of economic literatureclassification numbers c72 c73 d51 l16

markets correlation and regret matching inspired by the existing work on correlated equilibria and regretbased dynamics in games we carry out a first exploration of the links between the leading equilibrium concept for exchange economies walrasian equilibrium and the dynamics specifically regret matching dynamics of trading games that fit the economic structure and have the property that their pure nash equilibria implement the walrasian outcomes interestingly in the case of quasilinear utilities or transferable utility all the concepts essentially coincide and we get simple deterministic dynamics converging to walrasian outcomes connections to sunspot equilibria are also studied

the role of federal renewable fuel standards and market structure on the growth of the cellulosic biofuel sector abstract this article examines the effect of the renewable fuel standards and market power on the growth of the cellulosic biofuel sector we develop a sectoral model to show how changes in the regulations governing cellulosic fuel production affect the equilibrium quantity of cellulosic ethanol based on model calibration for washington state we find that existing low cost waivers purchased by obligated parties in lieu of cellulosic fuel production negate the effectiveness of the renewable fuel standard to induce the production and consumption of cellulosic biofuels however raising waiver price slightly relative to the status quo significantly increases the equilibrium quantity of cellulosic ethanol the high cost of cellulosic ethanol production is often cited as the cause of the lack of cellulosic ethanol production which is used to justify low waiver prices our policy message is the converse the low current waiver price significantly contributes to the cellulosic ethanol market stagnation in the context of the current biofuel policy

market uncertainty correlated and sunspot equilibria in imperfectly competitive economies first version received june 1988 final version accepted november 1990 eds an imperfectly competitive economy is very prone to market uncertainty including uncertainty about the liquidity or thickness of markets we show in particular that there exist stochastic equilibrium outcomes in nonstochastic market games if and only if the endowments are not pareto optimal we also provide a link between extrinsic uncertainty arising in games e g correlated equilibria and extrinsic uncertainty in market economies e g sunspot equilibria a correlated equilibria to the market game is either a sunspot equilibrium or a non sunspot equilibrium to the related securities games but the converse is not true in general

correlated equilibrium as an expression of bayesian rationality if it is common knowledge that the players in a game are bayesian utility maximizers who treat uncertainty about other players actions like any other uncertainty then the outcome is necessarily a correlated equilibrium random strategies appear as an expression of each player s uncertainty about what the others will do not as the result of willful randomization use is made of the common prior assumption according to which differences in probability assessments by different individuals are due to the different information that they have where information may be interpreted broadly to include experience upbringing and genetic makeup copyright 1987 by the econometric society

mobile money remittances and household welfare panel evidence from rural uganda access to financial services is crucial for development as it enhances resource mobilization needed for productive investment and facilitates consumption smoothing with a vast majority of adult ugandans having no access to formal financial services mobile money is expected to bridge this gap especially in rural areas this financial product allows users to make financial transactions using their mobile phones within five years of its inception in uganda since 2009 the mobile money service has been used by over 35 of the adult population and the rate of penetration is rapidly increasing we investigate its impact on household welfare using panel data covering 846 rural households using a combination of household fixed effects instrumental variable and propensity score matching methods we find a positive and significant effect of mobile money access on household welfare measured by real per capita consumption the mechanism of this impact is the facilitation of remittances user households are more likely to receive remittances receive remittances more frequently and the total value received is significantly higher than that of non user households we attribute this impact on the reduction in transaction transport and time costs associated with mobile phone based financial transactions our results are robust to changes in model specifications and alternative explanations

inflation capital markets and household saving in the nordic countries household saving ratios in the nordic countries are very low by international standards and have declined markedly during the 1980s aggregate quarterly time series data for the period 1970 89 are used to study the development of household saving behavior over time the evidence suggests that the household saving ratio responds positively to both the inflation rate and real income growth there is also some weak evidence to support the view that the rate of change in real housing prices has a negative effect on household saving ratios copyright 1992 by the editors of the scandinavian journal of economics

micro finance competition motivated micro lenders double dipping and default abstract we develop a tractable model of competition among socially motivated mfis so that the objective functions of the mfis put some weight on their own clients utility we find that the equilibrium involves double dipping i e borrowers taking multiple loans from different mfis whenever the mfis are relatively profit oriented further double dipping necessarily leads to default and inefficiency and moreover borrowers who face relatively higher transactions costs optimally decide to double dip interestingly an increase in mfi competition can increase the extent of double dipping and default further the interest rates may go either way with the interest rate likely to increase with more competition if the mfis are very socially motivated

correlated equilibrium in stochastic games we study the existence of uniform correlated equilibrium payoffs in stochastic games the correlation devices that we use are either autonomous they base their choice of signal on previous signals but not on previous states or actions or stationary their choice is independent of any data and is drawn according to the same probability distribution at every stage we prove that any n player stochastic game admits an autonomous correlated equilibrium payoff when the game is positive and recursive a stationary correlated equilibrium payoff exists journal of economic literature classification numbers c72 c73

repayment performance in group lending evidence from jordan abstract using data from a survey of 160 urban borrowing groups of the microfund for women in jordan we investigate the effect of screening peer monitoring group pressure and social ties on borrowing groups repayment behavior as an indirect test of different theoretical models the dependent variable used captures the intensity of default measured by the total number of days of late repayment after each due date allowing us to use count data models with cluster standard errors as theory predicts our empirical analysis suggests that peer monitoring group pressure and social ties reduce delinquency the paper uncovers interesting evidence about the role of social ties and religion most notably in an area where religion contributes to attitudes and beliefs of individuals we find that religiosity improves repayment performance

the strategic marshallian cross we prove existence and uniqueness of non autarkic equilibria in bilateral oligopoly assuming only that preferences are binormal and satisfy a weakened version of gross substitutes we permit complete heterogeneity of preferences and our analysis exploits the fact that payoffs depend only on own strategy and two universal aggregates this allows us to define strategic versions of supply and demand curves such that non autarkic nash equilibria are in 1 1 correspondence with intersections of these curves the same approach can be used to establish comparative statics under the assumptions above as examples we focus on adding players and changing endowments this competitive approach also allows us to conclude that much of conventional marshallian analysis is robust to strategic manipulation strategic marshallian cross strategic manipulation imperfect competition

on endogenous competitive business cycles the belief that the long run equilibrium of a competitive monetary economy that does not experience any exogeneous shocks whether originating from the external environment or from policy should be modelled as a state that is stationary or perhaps growing at a constant rate seems to be deeply rooted in the mind of some economists

do risky microfinance borrowers really invest in risky projects experimental evidence from bolivia abstractthis paper reports the results of an experiment testing a fundamental assumption in stiglitz and weiss 1981 model of credit rationing that defaulting borrowers are associated with investment in risky projects through an artefactual field experiment with 200 bolivian microfinance borrowers we observe that subjects from real world delinquent borrowing groups do not prefer risky projects to safer ones significantly more than subjects from repaying groups instead our results support more recent behavioural theories of credit market failure implications are that defaulting microfinance borrowers may be those who take too little investment risk rather than those who take too much

ethanol mandates and drought insights from a stochastic equilibrium model of the u s corn market the outlook for u s corn markets is inextricably linked to what happens to the u s ethanol industry which depends in turn on the level of government subsidies and mandates we develop a stochastic partial equilibrium model to simulate outcomes for the corn market for the 2008 09 marketing year to gain insight into these linkages the model includes five stochastic variables that are major contributors to corn price volatility planted acreage corn yield export demand gasoline prices and capacity of the ethanol industry our results indicate that integration of gasoline and corn markets has increased corn price volatility and that the passage of the expanded ethanol mandates in the energy independence and security act eisa has had modest effects on corn prices model results indicate an expected average marketing year price of 4 97 per bushel and a price volatility of 17 5 without the 10 billion gallon eisa mandate but with maintenance of the 0 51 per gallon tax credit imposition of the mandate increases the expected price by 7 1 and price volatility by 12 1 the effects of the mandate are modest as ethanol production would average 9 5 billion gallons without the mandate because of high gasoline prices the mandate is binding with a probability of 37 8 which indicates that an additional tax or subsidy will be needed to ensure that the mandate is met high corn prices caused by drought can cause the mandate to bind fixing 2008 corn yields at extreme drought levels increases expected corn prices to 6 59 per bushel without a mandate and to 7 99 per bushel with the eisa mandate an average additional subsidy of 0 73 per gallon of ethanol would be needed to ensure that the mandate is met in this drought scenario elimination of the current blenders tax credit would result in the mandate not being met in all cases on average a subsidy of 0 41 per gallon would ensure that ethanol production is at least 10 billion gallons in the 2008 09 marketing year

monopolistic competition and the effects of aggregate demand how important is monopolistic competition to an understanding of the effects of aggregate demand on output we ask the question at three levels can monopolistic competition by itself explain why aggregate demand movements affect output can it together with other imperfections generate effects of aggregate demand in a way that perfect competition cannot if so can it give an accurate account of the response of the economy to aggregate demand movements the answers are no yes and yes

income taxes and price variability in storable commodity markets progressive income taxes lead to distortions in economic decisions made across tax years this is particularly important when income is volatile as in the case of agriculture progressive taxes therefore can fundamentally change economic behavior over time this study explores how progressive income taxes influence storage decisions and the markets for storable commodities under a progressive tax system commodity storage tends to be lower in the aggregate and as a consequence price volatility increases these distortions could be eliminated by introducing a flat rate tax or by changing the tax reporting system for farmers

repayment frequency and default in microfinance evidence from india in stark contrast to bank debt contracts most micro finance contracts require that repayments start nearly immediately after loan disbursement and occur weekly thereafter even though economic theory suggests that a more flexible repayment schedule would benefit clients and potentially improve their repayment capacity micro finance practitioners argue that the fiscal discipline imposed by frequent repayment is critical to preventing loan default in this paper we use data from a field experiment which randomized client assignment to a weekly or monthly repayment schedule and find no significant effect of type of repayment schedule on client delinquency or default our findings suggest that among micro finance clients who are willing to borrow at either weekly or monthly repayment schedules a more flexible schedule can significantly lower transaction costs without increasing client default jel 012 016 022

u s farm policy and the volatility of commodity prices and farm revenues a dynamic three commodity rational expectations storage model is used to compare the impact of the federal agricultural improvement and reform fair act of 1996 with a free market policy and with pre fair policies results suggest that fair did not lead to significant increases in long run price volatility or revenue volatility the main impact of pre fair relative to the free market regime was to substitute government storage for private storage in a way that did little to support prices or to stabilize farm incomes results also indicate that u s grain market volatility in 1995 2000 was due to fundamental market forces and not to fair copyright 2002 oxford university press

endogenous imperfectly competitive business cycles abstract we investigate how imperfect competition affects the occurrence and the properties of endogenous rational expectations business cycles in an overlapping generations model with constant returns to scale in production the model has explicit product and labor markets all characterized by monopolistic competition an implicit assumption of barriers to entry justifies that the number of firms is fixed even when positive profits occur it turns out that both market power of firms on the product markets and market power of unions on the labor markets make the occurrence of cycles more likely in particular imperfect competition on the product markets and the positive profits associated with it may have the effect that there is a cycle even if the labor supply curve is increasing in the real wage rate for competitive cycles is required not only a decreasing labor supply curve but a wage elasticity below 1 2 at stationary equilibrium market power on the labor markets may have the effect that imperfectly competitive cycles are in accordance with certain empirical regularities some well known some reported in the paper concerning fluctuations in output and involuntary unemployment since involuntary unemployment does not occur under perfect competition such regularities are incompatible with competitive cycles

financial efficiency and social impact of microfinance institutions using self organizing maps summary this paper contributes to the literature by investigating whether the increased focus on financial self sustainability of microfinance institutions has been disadvantageous to the target audience we investigate the association between social efficiency and financial performance using a comprehensive data set that includes 650 microfinance institutions a self organizing map methodology is used to fully capture the existing heterogeneity among institutions the results show that we cannot support the hypothesis that there exists a trade off on the contrary we find evidence of a significant positive relationship between social efficiency and financial performance

the impact of mobile financial services usage on microfinance delinquency abstractthis paper studies the impact of mobile financial systems usage on microcredit delinquency ratios in tunisia by using either a two part model or matching econometric procedures our large dataset contains all of the administrative registers that belong to the six branches of enda the incumbent institution leader in tunisia we find a significant reduction of 4 92 days of late repayment for an average user of mfs in an environment where 15 of loans have been paid late at least once we foresee a tremendous opportunity to improve the mfis repayment ratios and consequently provide microcredit customers with more financing for income generating activities

recent advances in lending to the poor with asymmetric information abstract microfinance institutions have successfully extended unsecured small loans to poor and opaque borrowers at the bottom of the economic pyramid this success is largely due to innovative financial contracts that impose joint liability and create dynamic incentives to mitigate the effects of asymmetric information given recent advances in microfinance contracts there is a need to map the theoretical developments this article aims to accomplish that by performing a critical literature survey of microlending contracts focussing on joint liability and dynamic incentives bringing out some of the deficiencies of contract theoretic propositions that cannot effectively account for the social mission of microfinance

intertemporal cournot and walras equilibria an illustration in an intertemporal general equilibrium framework we compare a cournot equilibrium to the walras equilibrium the cournot agents trade and invest less than the walras agents this generates an inefficiency that does not vanish as the number of cournot agents tends to infinity a larger number of strategic cournot agents implies that the amount of trade relative to their aggregate consumption increases i e it moves towards the walrasian amount but their investment relative to the stock decreases i e it moves away from the walrasian amount s il y avait 3 4 n producteurs en concurrence la valeur de

women and repayment in microfinance a global analysis notice this is the author s version of a work that was accepted for publication in world development changes resulting from the publishing process such as peer review editing corrections structural formatting and other quality control mechanisms may not be reflected in this document changes may have been made to this work since it was submitted for publication a definitive version was subsequently published in world development 39 5 758 772 http dx doi org 10 1016 j worlddev 2010 10 008

impacts of ethanol policy on corn prices a review and meta analysis of recent evidence abstract the literature on the impacts of biofuels on agricultural commodity prices is characterized by contradictory findings we review studies published between 2007 and 2014 that estimate the effects of u s corn ethanol policy on corn prices and find estimates ranging from nil to over 80 such divergent results make it difficult to assess the merits of alternative biofuel policies to bring more clarity to the issue and facilitate comparisons across studies we assemble a database of over 150 medium to long run estimates of the effect of corn ethanol production on corn prices from 29 published studies we first normalize corn price impacts by the change in corn ethanol volume to control for the large differences in ethanol quantities across scenarios we then conduct a meta analysis to identify the factors that drive the remaining variation in corn price impacts across studies in addition to ethanol volumes we find that modeling framework projection year inclusion of ethanol co products and biofuel production from other feedstocks explain much of the differences in price effects the results indicate that a one billion gallon expansion of the us corn ethanol mandate in the year 2015 would lead to a three to four percent increase in corn prices with smaller price changes projected in future years

risk assessment and profit sharing in business networks abstract nowadays network is the preferred governance form to conduct economic transactions network solution allows to reach flexibility maintaining cost and quality level since network concept refers to a great variety of organizational hybrids it is possible to choose the one that fits better market requirements the new trends in inter organization relationships push towards network solutions companies are interested in relationships with partners and customers to overcome resource dependence to enter too risky market or simply differentiate their business portfolio the proposed research focuses on the network concept aiming at highlighting threats and opportunities to investigate the double nature of the risk concept network structures offer flexibility and higher profit as a consequence and business risk sharing opportunity these two aspects profit and risk are strictly related and have to be considered together to depict a complete scenario this implies that risk assessment and management in network environment cannot neglect profit sharing or in other words that profit sharing mechanisms should use risk as driver in this context our research proposes a methodology to measure risk taking into account network peculiarities risk estimation is a basic step to evaluate the opportunity cost of capital needed to compute the network net present value npv that is assumed as base in the profit sharing process the profit sharing process has been tackled using the shapley value approach that is inspired to the fairness principle while the opportunity cost of capital is assessed using the capital asset pricing model capm

best practices in credit accessibility and corporate social responsibility in financial institutions the purpose of this article is to present and discuss some of the best practices of financial industry in three emerging economies colombia ecuador and peru the main thesis is that notwithstanding the importance of certain specific deficiencies such as an inadequate regulatory context or the lack of financial education among the population the main factor that explains the low banking levels in emerging and developing economies affecting mostly lower income segments is the use of inefficient financial service distribution models in connection with this thesis we will try to show that traditional financial institutions both in developing countries and in the advanced economies have a special social responsibility to help create an efficient financial system that makes saving and borrowing instruments available to the greatest possible number of citizens

sunspots correlation and competition correlated equilibria in strategic market games played simultaneously by overlapping generations of players correspond to sunspot equilibria in the associated competitive economy we provide a necessary and sufficient condition for existence of effective correlation an increase in the number of agents in a given economy may allow for effective correlation

microfinance and loan officers work experiences perspectives from zambia this article studies the challenges faced by microfinance institutions in zambia whose remit it is to provide financial services to the poor it focuses on loan officers the agents of delivery on the ground with reference to loan officers experiences and words the paper examines how gender and education shape and structure their day to day encounters the study finds that different social spaces the office and the field and wider context explains the gendered culturally complex and multidimensional nature of developmental work at grassroots level social expectations emerge as major pressure points more for female loan officers than their male counterparts making them less suitable for microfinance work which has traditionally targeted poor women

tiebout economies with differential genetic types and endogenously chosen crowding characteristics abstract we consider a tiebout economy with differential crowding and public projects in which agents are distinguished by their tastes and genetic endowments agents choose which crowding characteristic for example a skill they wish to express and this affects their value to other members of their jurisdiction club firm etc an agent s choice is influenced both by his genetic endowment which affects his cost of acquiring crowding characteristics and by his preferences over which crowding characteristic he expresses we show that if small groups are strictly effective the core is equivalent to the set of anonymous competitive equilibrium outcomes but that the core generally contains taste homogeneous jurisdictions journal of economic literature classification numbers h41 h72

correlated equilibria and sunspots we examine when sunspots uncertainty that has no influence on endowments preferences or technology can affect equilibrium in a simple two period two commodity two class economy we find that such an effect is possibly only if the signals random variables that different agents observe are imperfectly correlated neither perfectly correlated nor independent and at least one commodity is a giffen good for two special cases we characterize the set of equilibria due to sunspots we conclude by showing the intimate connection between the sunspot equilibria of our finite horizon model and those of the overlapping generations literature

repayment incentives and the distribution of gains from group lending group loans with joint liability are a distinguishing feature of many microfinance programs while such lending benefits millions of borrowers major lending institutions acknowledge its limited impact among the very poor and have shifted towards individual loans this paper attempts to explain this trend by exploring the relationship between borrower wealth and the benefits from group lending when access to credit is limited by strategic default in our model individuals of heterogeneous wealth face a given investment opportunity so poor investors demand larger loans we show that the largest loan offered as an individual contract cannot be supported as a group loan joint liability cannot therefore extend credit outreach in the absence of additional social sanctions within groups we also find that the benefits from group loans are increasing in borrower wealth and that optimal group size depends on project characteristics by allowing for multi person groups and wealth heterogeneity in the population the paper extends the standard framework to analyze joint liability and contributes to an understanding of the conditions under which microcredit can reduce poverty

risk sharing and transactions costs evidence from kenya s mobile money revolution we explore the impact of reduced transaction costs on risk sharing by estimating the effects of a mobile money innovation on consumption in our panel sample adoption of the innovation increased from 43 to 70 percent we find that while shocks reduce consumption by 7 percent for nonusers the consumption of user households is unaffected the mechanisms underlying these consumption effects are increases in remittances received and the diversity of senders we report robustness checks supporting these results and use the four fold expansion of the mobile money agent network as a source of exogenous variation in access to the innovation jel e42 g22 o16 o17 z13 in developing countries informal networks provide an important means by which individuals and households share risk though the insurance they provide is often incomplete economists have proposed a number of reasons for this incompleteness including information asymmetries which manifest in problems of moral hazard and limited commitment both of which induce positive correlations between realized income and consumption in this article we emphasize a complementary source of incompleteness transaction costs literally the costs of transferring resources between individuals we test the impact of transaction costs on risk sharing by analyzing data from a large panel household survey that we designed and administered in kenya over a three year period to capture the expansion of mobile money this financial innovation has allowed individuals to transfer purchasing power by simple short messaging service sms technology and has dramatically reduced the cost of sending money across large distances mobile money is a recent innovation in developing economies one of the first and most successful examples to date is kenya s m pesa 1 in just four years after its

investment in cellulosic biofuel refineries do waivable biofuel mandates matter we develop a conceptual model to study the impact of mandate policies on stimulating investment in cellulosic biofuel refineries in a two period framework we compare the first period investment level fil under three scenarios laissez faire non waivable mandate nwm policy and waivable mandate wm policy results show that when plant level marginal costs are increasing then both nwm policy and wm policy may stimulate fil the wm policy has a smaller impact than does the nwm policy when the plant level marginal costs are constants however wm policy does not increase fil but does increase the expected profit of more efficient investors copyright 2012 oxford university press