Manash Ranjan Gupta

Formal Credit, Corruption and the Informal Credit Market in Agriculture: a Theoretical Analysis

The paper presents a theory of interest rate determination on informal credit in backward agriculture when there is a market for formal credit. The farmer has to bribe the official of the formal credit agency in order to get formal credit. The official and the moneylender play a non-cooperative game in choosing the amount of formal credit and the informal interest rate, respectively. The informal-sector interest rate and the effective formal-sector interest rate (incorporating the bribe) are equal in equilibrium. A reduction in the formal interest rate and/or an increase in the price of the product may lead to an increase in the equilibrium bribing rate and the informal interest rate when the formal credit and the informal credit are complementary to each other.

Wage Determination of a Child Worker: A Theoretical Analysis

A theory of wage determination of a child worker is presented using the consumption efficiency hypothesis and the Nash bargaining technique. The employer and the guardian of the child play the bargaining game. The model shows some interesting results regarding the split of the wage between the consumption of the child and the income of the guardian.

Delayed formal credit, bribing and the informal credit market in agriculture: A theoretical analysis

The paper presents a theory of interest rate determination in the informal credit market in backward agriculture. The market for informal credit is created by the delay in disbursement of formal credit. The delay is controlled by the official of the formal credit agency, and he is bribed by the farmer to reduce the delay. The official and the moneylender play a non-cooperative game in choosing the bribing rate and the informal interest rate, respectively. The informal sector interest rate and the effective formal sector interest rate (incorporating the bribe) are equal in equilibrium. Agricultural price and credit subsidy policies may raise the interest rate in the informal credit market.

Foreign Capital and the Informal Sector: Comments

The first model of V. Chandra and M. A. Khan (1993) has been extended in the following directions: (1) migration equilibrium condition has been generalized; (2) capital market distortion has been introduced; and (3) land as an agricultural input has been considered. It appears that the Brecher-Diaz-Alejandro (1977) proposition may lose its validity in some special cases. Copyright 1997 by The London School of Economics and Political Science

Informal sector and informal capital market in a small open less-developed economy

Abstract A three-sector static model of a small open economy has been developed with special consideration to the urban informal sector and the informal capital market. Informal capital is mobile between the rural sector and the urban informal sector. Policy effects in this model appear to be different from those analysed in other three-sector models.

Foreign capital, income inequality and welfare in a Harris-Todaro model

Abstract The effects of an inflow of foreign capital on social welfare are analysed in a mobile-capital, Harris-Todaro economy, in which all income earned by foreign capital is repatriated, and in which there is no tariff. We consider the welfare measure of Sen (1974) which incorporates the Gini-coefficient of the income distribution. It is shown that an inflow of foreign capital worsens the income distribution and lowers social welfare according to Sens measure, even in the absence of a tariff, if the manufacturing sector is capital-intensive relative to the agricultural sector in employment-adjusted terms.

Duty-free Zone, Unemployment, and Welfare A Note

We consider a small open Harris-Todaro economy with the urban sector consisting of a “duty-free zone” and a “non-duty free zone.” There is no capital mobility between the urban sector and the rural sector, but capital is perfectly shiftable between the two sub-sectors of the urban sector. A policy of expanding the duty-free zone through the reduction in import-duty on intermediate goods in that sector ultimately lowers the level of output of that sector. This policy also raises the level of unemployment, lowers national income (social welfare), and increases economic inequality. If, however, the tariff on the final product is reduced in that sector, we get the opposite result.

Tax on foreign capital income and wage subsidy to the urban sector in the Harris-Todaro model

Abstract We consider endogenous foreign capital inflow in the different versions of Harris-Todaro model. Wage subsidies are financed by taxing the foreign-capital income which is otherwise repatriated. Their effects on unemployment and national income are analysed.

Foreign capital and technology transfer in a dynamic model

We consider a dynamic three-sector dual-economy model when the technology transfer takes place from the foreign enclave to the labor-intensive domestic enclave. The long-run equilibrium and the comparative steady-state effects are analyzed. It is shown that the policy of subsidization to the foreign enclave may satisfy the conflicting tasks of raising national income and lowering unemployment simulataneously in the long run. Subsidization to a domestic enclave does not satisfy both the objectives.

Foreign Enclaves and Economic Development: a Theoretical Analysis

We consider an urban foreign enclave with sector-specific foreign capital in an otherwise mobile-capital Harris-Todaro model. We consider the taxation of foreign capital. A dynamic version of this model is considered. The long-run equilibrium and the comparative steady-state effects are analyzed. We get some interesting effects of reduction in tax rate on foreign capital on the short-run and the long-run equilibrium levels of domestic factor income and national income under some meaningful conditions.