landlords tenants and technological innovations abstract there is a long standing belief that landlords and capitalists have used their control over the means of production to direct the development and adoption of technologies which have increased their welfare at the expense of workers there is also a wide spread belief that the interlinkage between credit and tenancy markets which seems so prevalent in ldcs provides further impetus to the resistance of innovations innovations which make tenants better off reduce their demand for loans and thus make landlords qua creditors worse off these contentions have typically been dismissed out of hand by standard welfare economics arguments the rural environment of most ldcs may not however be adequately described by the standard economic model on which this welfare analysis is based in particular in many ldcs sharecropping contracts are widely employed there is evidence of widespread unemployment and there is not the full set of risk and capital markets required by the competitive paradigm the objective of this paper is to show under quite general conditions that the institutional structure of the economy may indeed be an important determinant of whether a particular innovation will or will not be adopted we show that 1 i landlords may wish to and can resist innovations which unambiguously increase production whenever sharecropping contracts are employed 2 ii conversely landlords may adopt innovations which not only lower the welfare of workers but even lower net national product 3 iii the presence of interlinkage may indeed affect the adoption of a new technology however the reason for this is only partly related to the effect of innovations on tenants borrowing indeed we show that innovations may increase as well as decrease the tenants demand for borrowing

learning to believe in sunspots a number of authors have shown that competitive economies may possess sunspot equilibria that is rational expectations equilibria in which purely extrinsic uncertainty affects equilibrium prices and allocations 2 such results demonstrate that it does not require a lack of faith in the rationality of market participants to believe that competitive markets may be subject to purely speculative fluctuations driven solely by expectations 3 the mere existence of sunspot equilibria as solutions to a system of marketclearing conditions however might not be judged sufficient to indicate that competitive markets with rational participants could ever be subject to speculative instability the sunspot equilibria represent states of affairs in which agents act differently in the case of different realizations of the sunspot variable and it is rational for each agent to do so but it might be thought unlikely that the beliefs of all the participants in the market could ever come to be coordinated so as to bring about an equilibrium of that kind it is rational to believe that sunspots convey information about future states of affairs once the economy is in a sunspot equilibrium but why would rational agents ever begin to believe in such a thing so as to create the conditions under which the belief is rational in order to address such a question one must go beyond the mere statement of the conditions for equilibrium and discussion of what states of affairs satisfy them one must specify an explicit dynamic process according to which the beliefs of agents adjust when out of equilibrium any exercise of this kind is necessarily unsatisfactory as there is no univocal meaning for the postulate of rational behavior outside of an equilibrium it may well be the case that

indeterminacy of stationary equilibrium in stochastic overlapping generations models abstract in this paper we consider the local uniqueness properties of stationary rational expectations equilibria ree in a stochastic overlapping generations olg model it is known that in non stochastic olg models steady state equilibria are locally isolated although there may exist indeterminate non stationary perfect foresight equilibria we show by construction that in the stochastic model even stationary equilibrium may be indeterminate we also show that this result is robust in the sense that there exists a non empty open set of economies for which the result is true

on the existence of sunspot equilibria in an overlapping generations model abstract the existence of sunspot equilibria is shown in a one commodity overlapping generations model without stationarity assumptions on preferences endowments or nominal taxes the essential assumption is that there is a continuum of perfect foresight equilibria the technique is also useful for constructing stationary sunspot equilibria when they exist consumption in a sunspot equilibrium is shown to lie within the range consistent with perfect foresight

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

seasonality differential access and interlinking of labour and credit this article explains the interlinking of rural labour and credit transactions in terms of differential access to credit markets and seasonality a model is developed which incorporates not only seasonality and differential access but also several other explanations for interlinking suggested in the literature moreover it allows one to test the sensitivity of the results to differing powers on the part of landowners relative to working households

interlinked contracts and moral hazard in investment abstract in agricultural tenancy arrangements the tenant is often required to undertake effort aimed at maintaining and improving the productive stocks this paper investigate the design of contracts which induce optimal investment of such effort it is found that a long term contract which interlinks tenancy with a credit agreement is optimal in equilibrium the tenant obtains credit from the landlord at a rate of interest below the market and is perpetually indebted to the landlord

sunspot equilibria and periodic cycles under idiosyncratic uncertainty abstract this paper investigates how some intrinsic uncertainty affects the existence of sunspot equilibria and deterministic cycles in an overlapping generations model in the model there exists an intrinsic idiosyncratic uncertainty under which each individual has a small probability of losing consumption goods due to the law of large numbers this uncertainty causes no fundamental macroeconomic fluctuation however since it may change the dynamic stability the model may have both stationary sunspot equilibria and deterministic cycles even if the degree of relative risk aversion is small in particular these equilibria can exist even if the probability of loss is negligible

cost sharing arrangements under sharecropping moral hazard incentive flexibility and risk this paper explains the rationale and describes the characteristics of cost sharing arrangements in rural developing economies focusing on the risk and incentive properties of alternative cost contracts and on their flexibility their ability to adapt to environmental changes it is shown that where labor inputs are difficult to monitor the rule that cost shares and output shares be equalized will not hold and is not constrained pareto efficient and that cost sharing contracts have a decided advantage over contracts which specify the level of inputs whenever there are asymmetries of information regarding production technology between the landlord and the tenant

interest on reserves and sunspot equilibria friedman s proposal reconsidered friedman s 1960 proposal to pay interest on required reserves is considered in a setting that eliminates the indeterminacy of steady state equilibrium discussed by sargent and wallace 1985 in an overlapping generations model where the real rate of interest is technologically determined the payment of interest on reserves results in a determinate pareto optimal steady state equilibrium however interest payments on reserves reduce the steady state welfare of all young agents and for many economies result in the existence of stationary sunspot equilibria this is the case even if such equilibria cannot exist when reserves do not earn interest

a theory of interlinked rural transactions this paper argues that the interlinking of labor output and credit contracts often observed in rural economies can be regarded as an attempt to improve allocative efficiency in the face of moral hazard it advances an economic explanation of the phenomenon which is rooted in the view that prevalent modes of transaction of which interlinked contracts are an example are shaped by technological considerations interlinking is shown to be an efficient economic response to unequally distributed information arising from the uncertainty which characterizes subsistence agriculture all pareto efficient allocations require a combination of wage cum output sharing with consumption credit contracts the analytical framework set up to demonstrate the results is used to examine the response of the contractual parameters to changes in i the returns to alternative occupations available to tenant laborers ii the cost of credit to the village economy and iii the riskiness of cultivation the analysis concludes that public policy to alleviate rural poverty must recognize the relationships between technological considerations and modes of transaction in the absence of a complete set of markets

stationary sunspot equilibria in a finance constrained economy abstract stationary sunspot equilibria are shown to exist in a production economy with infinite lived agents when it is not possible to borrow against future wage income equilibrium fluctuations exhibit persistence over time scales of the same order of magnitude as observed business cycles an active fiscal policy that stabilizes aggregate money expenditures can prevent such fluctuations

theories of share tenancy a critical survey for the past 2 decades the problems of agricultural tenancy have attracted a great deal of attention not only from agricultural economists but also from economists in general as a typical example of agencyprincipal contract relations despite the prolific growth of literature both theoretical and empirical there has been little convergence in opinions on tenancy contracts the divergence has been especially great on the understanding of the causes and the effects of sharecropping tenancy much confusion underlying the widely divergent perspectives has stemmed from partial treatments of contractual choice which unduly limit the optimizing behavior of contracting parties and the options of contract forms this essay aims at clarifying the sources of the confusion by reviewing the past literature in light of the more general theory of agency principal relations the agency theory in order to examine the problems of various theoretical models in a unified framework in section ii we first develop the basic framework of a general model of tenancy contract in section iii we clarify in terms of the general model contradictions latent in the traditional marshallian theory which asserts that share tenancy is inefficient because of the disincentive effect of cropsharing on the tenant s work effort in section iv we attempt to show that recent efforts to reconstruct the theory based on the traditional assumption have not yet been quite successful section v draws implications and testable hypotheses from more general theories incorporating the aspects of risk and uncertainty section vi tests allocational and distributional implications of those alternative hypotheses based on the summary of evidence col

strategic complementarity in business formation aggregate fluctuations and sunspot equilibria the extent to which changes in beliefs can be important factors in initiating economic fluctuations has been a prominent area of investigation for macroeconomists the notion that beliefs about the future influence current decisions is a property of almost all dynamic economic systems the more challenging task is identifying economic environments in which changes in beliefs alone influence current choices in such a way that the variations in beliefs are self fulfilling because the resulting fluctuations arise in the absence of variations in fundamental variables such as preferences and technology they are often termed sunspot equilibria apart from suggesting that instability of expectations may be a distinct source of cyclical volatility sunspot equilibria may also explain why apparently small disturbances in fundamentals lead to large change in macroeconomic aggregates in this study we demonstrate the possibility of sunspot equilibria in an overlappinggenerations economy characterized by a plausible form of strategic complementarity as more agents enter as producers in any particular sector of the economy they create an incentive for agents to enter as producers into other sectors as well 2 the basis for this

confidence and the real economy the japanese case this paper empirically analyses whether consumer confidence has an effect on the real economy in japan this paper uses vector autoregressions including variables which represent consumer confidence it is shown that in the cases of quarterly and monthly data consumer confidence has a significant effect on gdp fluctuations whereas in the case of semiannual data it has no effect in other words consumer confidence has an effect on only short term economic fluctuations

increasing returns and animal spirits the purpose of this note is to simply point out that the multiplicity intrinsic of course to the presence of non convexities characterizes the models of growth with external increasing returns which have been studied recently and more importantly to show that the many competitive equilibria which often arise in those models can be interpreted as animal spirits equilibria that is equilibria indexed by the consumers optimism or pessimism this multiplicity of competitive equilibrium paths can be viewed as providing a new foundation upon which to build a theory of self fulfilling prophecies one which relies solely on the existence of external effects and does not rest on the overlapping generation structure or on back ward bending offer curves the conclusion that multiple animal spirits competitive equilibria are likely to arise in a model of external increasing returns would survive the generalization of the framework used in this paper to many period environments be they overlapping generation or representative agent infinite horizon structures this abstract was borrowed from another version of this item

limited liability and the existence of share tenancy abstract the paper considers the problem confronting an absentee landlord who can lease out his land on a fixed rent contract share rent contract or a mixture of the two it is argued that in poor areas it is natural to have each contract underwritten by an implicit limited liability clause which allows a person to forego paying rent under extreme crop failures in the presence of such an implicit clause a certain tension appears between a tenant and a landlord with the former preferring risky projects and the latter preferring safe ones it is shown that in such a case share tenancy turns out to be the dominant system from among the class mentioned above because it minimises the tension between the landlord and the tenant the result is then used to discuss conditions under which share tenancy will tend to wither away

interlocking transactions obstacles precursors or instruments of agrarian capitalism abstract rural labor arrangements often change rapidly and in ways that prevailing theories cannot explain explicit understanding of the exercise of power in rural society sheds considerable light on how and why rural labor arrangements change in the course of economic development this paper shows how different labor tying arrangements embody exclusionary mechanisms that can serve as instruments of both labor management and social control macro political and economic conditions shape the ways in which these mechanisms operate and are in turn influenced by them viewing labor arrangements in this way helps resolve problems confronted by the prevailing theories and allows for a broader understanding of dynamic processes

endogenous price fluctuations in an optimizing model of a monetary economy this paper demonstrates that an optimizing model of a monetary economy can produce perfect foresight equilibria in which the price level fluctuates forever cyclically or chaotically fluctuating equilibria are more likely to exist when the rate of money supply growth is high furthermore the set of equilibrium prices may have a complicated topological structure which poses a more serious problem concerning the validity of comparative statics method than any sort of indeterminacy previously discussed in the literature copyright 1991 by the econometric society

capital requirements screening and interlinked sharecropping and credit contracts this paper provides one more rationale for interlinking credit and tenancy contracts in the context of production loans in an environment characterized by a heterogeneous labor pool and imperfect information landlords will have an incentive to avail themselves of screening devices by linking tenancy and credit contracts a screening device can be implemented the equilibrium set of contracts is characterized by a variety of interest rates some of which might be below the market interest rate the interest rate principal schedule is downward sloping with higher ability tenants choosing larger principals at lower interest rates

eefects of reintegration activities on the dutch labour market regarding levels of education in the netherlands during the early nineteen nineties social security administration offices and labour exchange offices decided to co operate goal of this cooperation is to support the reintegration of unemployed people into the labour market and to shorten the individual spells of unemployment as a result of the cooperation information is available about levels of education of the unemployed this article primarely focuses on the effects of reintegration activities on the duration of unemployment for different levels of education results of the analysis are compared with the human capital theory also the question is discussed whether within the framework of the cooperation persons with a higher level of education have shorter spells of unemployment finally there is an analysis of the effects of activities undertaken by the unemployed themselves to find a job people with a university degree have significant longer spells of unemployment the reintegration activities of the social security administr

a theory of signalling during job search employment efficiency and stigmatised jobs this paper discusses why redundant skilled workers may be reluctant to accept interim unskilled jobs if skilled work is more satisfying or less arduous for highly productive workers then such workers invest more in moving quickly between skilled jobs thus high productivity workers tend to search on the job and if unemployed will specialise in job search rather than take an interim position if individual differences in productivity are known to the worker but not the potential employer then search strategy may be used as a productivity signal with more than the efficient proportion of workers searching on the job and too few accepting interim unskilled jobs optimal policy requires a subsidy on interim unskilled jobs

stabilizing competitive business cycles abstract we study how stylized monetary proportional money transfers fiscal lump sum money transfers and public expenditure policies may eliminate endogenous deterministic cycles and stationary markov sunspot equilibria in a simple version of the overlapping generations model we also present new constructive methods for analyzing stationary markov sunspot equilibria in such a framework

legal restrictions sunspots and cycles abstract an economy in which legal restrictions prevent private agents from issuing close substitutes for money is examined specifically in a model with borrowing and lending agents are prevented from acquiring privately issued liabilities in amounts smaller than some minimum dollar denomination an economy is then constructed which has no sunspot equilibria absent such a restriction in the presence of the restriction however conditions sufficient to rule out equilibrium 2 cycles also imply the existence of stationary sunspot equilibria this is the case even though all agents have savings functions that are non decreasing in relevant rates of return

multi task sharecropping contracts the italian mezzadria we use recent developments in the multi task principal agent methodology to study a sharecropping contract that was pervasive in central italy we distinguish between subsistence crops and cash crops we analyse the spillover effect from one crop to the other and we show that this reduces the ability of this sharecropping economy to adjust to a changed environment we trace the effects of the changes in agricultural prices in the second half of the nineteenth century finally we propose some explanation for the puzzling phenomenon of the reintroduction of many feudal clauses in the sharecropping contract when the rest of the italian economy was beginning to modernize copyright 1996 by the london school of economics and political science

moral hazard and optimal commodity taxation abstract this paper demonstrates that in an economy with moral hazard and more than one commodity competitive equilibrium is not constrained efficient to correct the market failure differential commodity taxation is necessary a general optimal tax formula is derived and special cases of is discussed

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

search behaviour transitions to non participation and the duration of unemployment using longitudinal micro data on unemployed individuals for 1983 85 a structural job search model is estimated the model allows for transitions from unemployment to nonparticipation an extended version of the model deals with the influence of on the job search and prospective wage increases on search behavior of the unemployed the empirical results show that the probability of accepting a job offer is almost one for most unemployed individuals a large portion of unemployment spells ends in a transition out of the labor force the effects of changes in benefits on duration appear to be extremely small copyright 1990 by royal economic society

disneyland monopoly interlinkage and usurious interest rates abstract interlinkage between labour and credit markets is interpreted as a consequence of a monopolistic moneylender s attempt to extract consumer s surplus from the borrower by levying a two part tariff this analogy enables us to draw on the literature on non linear pricing to high light issues in agrarian structure the consequence of policy interventions like taxes and minimum wage legislation is studied it is shown that the moneylender will charge usurious interest rates if wages are rigid downwards or there is a tax on agricultural income or borrowers have heterogeneous preferences some geometry for analysing interlinkage is developed and used for deriving some of the results

entry of the unemployed into employment theory methodology and dutch experience van dijk j and folmer h 1985 entry of the unemployed into employment theory methodology and dutch experience reg studies 19 243 256 this study examines the entry probabilities of the unemployed into the employed labour force the personal characteristics age work experience education and family status and the regional characteristics regional unemployment and average regional income are theoretically derived as the determinants of the entry probabilities the theoretical model is empirically tested with data from the dutch labour force survey 1979 by means of maximum likelihood logit analysis the results closely conform to the theoretical expectations on the basis of the analysis some conclusions for labour market policy are formulated

information and the operation of markets tests based on a general equilibrium model of land leasing in india abstract this paper develops an estimable general equilibrium model of land leasing to test the extent to which information is commonly held in a village and whether village markets are efficient information regarding the relative farming skill of households is found to be widespread but the assumption of perfectly efficient markets within the village is rejected these results have ramifications for the estimation of agricultural household models and for our understanding of rural institutions the model is derived from the primitives of the production technology the extent of information and the distributions of assets and several household unobservables simultaneity and selection issues are dealt with explicitly in a two stage maximum likelihood estimation procedure using panel data from india

moral hazard and marshallian inefficiency evidence from tunisia abstract we formalize the link between optimal cost sharing contracts and the production technology in the presence of moral hazard by appealing to several well known results from duality theory building on intuitions from the interlinkage literature we show that optimal contractual structure is determined by the i substitution possibilities that exist between different observable factor inputs as well as ii between these inputs and unobservable effort we endogenize contractual choice using landlord characteristics as instruments exploiting the fact that in our dataset landlords interact with several tenants and vice versa the approach is applied to an unbalanced plot level panel of cost sharing contracts in a tunisian village using a translog representation of the restricted profit function contractual terms are found to be a significant determinant of input use and therefore lead to marshallian inefficiency while the optimality of the underlying contractual structure is rejected

credit and sharecropping in agrarian societies this paper considers a model of linkage between land labor and credit transactions in the context of sharecropping the paper s objectives are a to derive and characterize the equilibrium in a model of a land scarce labour abundant economy under sharecropping given an infinitely elastic supply of identical sharecroppers at a reservation utility and b to demonstrate that in an imperfect market a landlord may offer credit to his tenant sometimes even at a subsidized rate of interest without necessarily insisting that the sharecropper borrow only from him precluding an involuntary linkage between credit and land transations it has been demonstrated that regardless of the presence or absence of linkage or any other control by the landlord as long as he can vary the size of the plot given to a tenant and there are enough potential tenants in equilibrium contracts a tenants utility under sharecropping will be the same as that which he could have obtained as a full time wage laborer this result implies that policies other than land reform will not affect the welfare of tenants

tenancy and interlocking markets issues and some evidence abstract it is frequently asserted that the land lease markets in agrarian economies tend to be interlocked with other markets in recent years a number of theoretical models have been constructed to explain and analyze interlinkages of various markets under cropshare tenancy however the empirical basis for such assertions remains very weak this paper reviews the issues discussed in the literature and attempts empirical verification in the specific context of agriculture of bangladesh the evidence presented does not reveal any significant interlinkages of rural markets in bangladesh

credit layering in informal financial markets abstract informal lenders with access to markets or capital often find it attractive to delegate loan provision to downstream lenders who have an information or enforcement advantage in dealing with particular borrowers in this paper we examine the conditions under which such an arrangement is preferred by two informal lenders a landlord and a merchant who compete in loan provision to tenant farmers differentiated by wealth we show that credit layering is preferred only when tenants are sufficiently poor in this case the trader lends to tenant farmers via a contract with their landlord otherwise only the trader lends as a consequence a pattern of borrowing emerges in which relatively wealthy tenants borrow from merchants while poor tenants borrow mainly from their landlords interlinkage between land and credit thus arises only for a subset of tenants and purely as a consequence of credit layering this pattern is shown to be supported empirically

double moral hazard and resale price maintenance incentives for resale price maintenance rpm are studied in a wholesaler retailer relationship in which both firms make a nonprice choice subject to moral hazard the best attainable contract has vertical externalities in both nonprice choices and the choice of consumers price if delegated to the retailer rpm controls the latter externality but interacts with the other externalities as well as a consequence either minimum or maximum vertical price fixing can be optimal in spite of a successive monopoly specification similar incentives exist for writing other variables into contract such as the capital input of the retailer

interlinked contracts an empirical study this study investigates the contractual relationship between farmers and sugar mills in colonial taiwan our investigation is based on a model of interlinked contracts which is adapted from gangopadhyay and sengupta 1987 the validity of our model s predictions is verified by analyzing a data set consisting of contracts between taiwan s cane farmers and sugar mills during the period of japanese occupation our data suggest that the contractual relationship is consistent with a second best scenario where the interest rates charged by sugar mills on cash loans to farmers are set in order to prevent diversion of funds to non production uses

equilibrium cycles in an overlapping generations economy with production abstract perfect foresight equilibrium trajectories of an overlapping generations model with production may include stable or unstable invariant closed curves these orbits are detected using the hopf bifurcation theorem where the parameter of bifurcation is purely technological the paper also proves that there is a stabilization policy that completely eliminates the cycle finally using a c e s production function it is shown that the range of values of the elasticity of substitution between capital and labor for which cycles may exist is bounded above

the emergence of equilibrium cycles in a monetary economy with a separable utility function abstract this paper analyzes the dynamic properties of the monetary economy when money held during the period induces some utility it is shown that the price level and real money balances may have chaotic dynamic paths even if the utility function is separable in real money balances and consumption a crucial point is that a constraint on the utility of money yields the wealth effect that inflation will reduce the real value of assets hence as in the overlapping generations model the conflict between substitution and wealth effects may cause globally stable periodic orbits as well as the complicated dynamics

sunspot equilibria rational bubbles in a model of money in the utility function abstract sunspot equilibria are constructed in brock s 1975 model of money in the utility function serial correlations of real balances and the nominal interest rate in these equilibria can be either positive or negative the example here suggests that local sunspots are more likely to exist when the agent s discount rate is small and that serial correlations in local sunspots when they exist are inversely related to the rate of money growth it is also shown that stationary sunspots may exist even when equilibrium cycles do not

the impact of the great migration on mortality of african americans evidence from the deep south the great migration the massive migration of african americans out of the rural south to largely urban locations in the north midwest and west was a landmark event in u s our paper shows that this migration increased mortality of african americans born in the early twentieth century south this inference comes from an analysis that uses proximity of birthplace to railroad lines as an instrument for migration

some consequences of credit rationing in an endogenous growth model an endogenous growth model is developed where all investment is financed via credit extension there is also an adverse selection problem in loan markets so that in equilibrium credit rationing arises endogenously the result is that equilibrium levels of credit rationing and real growth rates are jointly determined in this context several changes in the environment can have unusual consequences for instance improvements in the technology for producing capital can reduce growth because of their adverse impacts on credit rationing for similar reasons various government investment subsidies can be growth reducing this phenomenon is often observed empirically

sharecropping and the interlinking of agrarian markets one of the often noted features of less developed agrarian economies is the existence of interlinkages among the land labor credit and product markets the landlord is often the supplier of credit he frequently purchases and markets the output of the tenant farmers and often sells raw materials and even consumption goods to his tenant farmers how can this phenomenon be explained what are the welfare consequences of attempts to restrict these practices which often seem to constitute restraints on free trade these are the questions to which this paper is addressed a general set of arguments applicable to both competitive and noncompetitive environments are presented to situations where all the terms of the contract are determined in an optimal way as well as to situations where many of the terms are specified institutionally section i examines interlinked credit and tenancy contracts section ii examines interlinked marketing and tenancy contracts section iii points out the possible interlinking between labor contracts and consumption goods markets and section iv presents the different equilibrium frameworks discussed in the paper such as monopoly monopsony competition and equilibria with surplus labor

endogenous emergence of credit markets contracting in response to a new technology in ghana abstract access to credit is important for the productivity and overall welfare of farmers in developing countries we present a theoretical framework which shows that a change in the mode of shipping from air to sea in the ghanaian pineapple industry made it profitable for pineapple exporters to provide myopic farmers with both in kind loans to improve productivity and cash loans for consumption smoothing despite being unable to monitor farmers or enforce repayment the innovative theoretical result is that providing farmers with additional cash loans can enforce greater input use without compromising repayment we provide evidence in the form of a case study documenting the dramatic rise of informal credit through contract farming after the switch to sea freight between 1996 and 2001 using this anecdote we argue that credit arrangements can arise spontaneously absent non market interventions to meet market needs even in the absence of proper legal protections for creditors

rural credit markets and institutions in developing countries lessons for policy analysis from practice and modern theory this article presents evidence of the failure of government intervention in rural credit markets of ldcs in the past three decades it then shows how lessons for policy analysis can be drawn from modern theory particularly those theories focussing on credit rationing in competitive markets and interlinking of credit contracts with labor and land contracts the article outlines the policy implications of these theories and finds them insufficient to account for the empirical evidence it contends that a more systematic and rigorous analysis of institutions and institutional environments is essential for understanding and implementing effective policy reforms of rural credit markets it presents suggestions for undertaking such an analysis

an inquiry into quasi credit contracts the role of reciprocal credit and interlinked deals in small scale fishing communities in agrarian village societies beset with many hazards and uncertainties people evolve various means of coping with risk what is perhaps less known is that credit transactions can sometimes serve the function of reducing risk in such societies this article is concerned with examining several insurance motivated credit arrangements in small scale fishing communities a hunger insurance mechanism of reciprocal credit and a system of interlinked contracts aimed at insuring against risks in the spheres of labour and marketing relations will be extensively dealt with moreover the concept of triadic relationships will be shown to have special relevance in the case of traditional insurance arrangements aiming at controlling problems of moral hazard

the role of monetary policy in eliminating nonconvergent dynamic paths this paper investigates the effects of money growth on nonconvergent dynamic paths in a money in utility model when relative risk aversion is decreasing in money period two cycle and sunspot equilibria are always associated with a high rate of money supply growth however when relative risk aversion is increasing in money it is ambiguous whether they are associated with either high or low rate of money supply growth the paper also investigates the same problem in a transaction cost model the author shows that the results essentially depend on the form of the transaction cost function copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

targeting child labor in debt bondage despite recent multilateral efforts to single out child labor in debt bondage as one of the worst forms of child labor several important questions have yet to be addressed how pervasive is the phenomenon are there systematic correlations between the incidence of children in debt bondage and the economic legislative and financial development indicators of the economy how does an understanding of these correlates affect the way national and international policy measures aimed at targeting this form of child labor are perceived this article addresses each of these questions the empirical findings suggest strong correlation between the likelihood of the incidence of child labor in debt bondage with the stage of development of an economy the stage of financial development and enforcement of core labor rights building on this evidence the article presents a theoretical model that highlights the drawbacks and merits of a number of policies aimed at putting checks on child labor in debt bondage

unemployment benefit duration and incentives in britain how robust is the evidence abstract recent years have seen considerable advances in the econometric treatment of micro data in models of unemployment duration this paper examines the evidence from such models concerning the effects of unemployment benefits on incentives to work in britain widely accepted results of a small but significant benefit effect are reproduced using a sample of 1 231 unemployed men however these results are only found when benefit receipt is assumed to follow a hypothetical pattern which is shown to be unrealistic and over generous when more realistic calculations of benefits are used no benefit effect is found the paper also argues that search theory is of little help in determining the choice between competing functional forms and explanatory variables results concerning benefits are shown to be sensitive to the latter