Exercise4_07text - Econ 171-EEP 151 Fall 2007 Alain de...

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Econ 171-EEP 151 Alain de Janvry Fall 2007 Exercise #4 Microfinance, rural development, and trade Due November 20, 2007 1. Can microfinance succeed in giving access to capital to the poor? Read the article by Beatriz Armendariz and Jonathan Morduch: “Microfinance: Where do we stand?” http://www.economics.harvard.edu/faculty/armendariz/papers/Microfinance_Where_Do_ We.pdf Answers the following questions: 1.1. How do they define the following problems encountered in lending without collateral: Adverse selection (AS) Ex-ante moral hazard (MH) Ex-post moral hazard 1.2. According to them, and based on what you know from class, how is group lending expected to solve the problems of: AS Ex-ante MH Insurance Ex-post MH 1.3. Can group lending fail to resolve each of these four problems? 2. “Swaziland: Food or biofuel seems to be the question.” Reuters Foundation , 25 Oct 2007 http://www.alertnet.org/thenews/newsdesk/IRIN/c56b123852cc22ec4fce495bd39421c6.h tm The government of Swaziland is facing three key policy dilemmas: Efficiency: Favor production in smallholder farms or on large scale farms? Food security: Produce food crops or cash crops (biofuels)? Poverty: Favor autonomous incomes in smallholder farming or wage income on large farms? Say that these choices combine in two alternative options:
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This note was uploaded on 08/01/2008 for the course ECON 171 taught by Professor De janvry during the Fall '07 term at University of California, Berkeley.

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Exercise4_07text - Econ 171-EEP 151 Fall 2007 Alain de...

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