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- W2110306532 abstract "This paper develops a model to capture the key features of poverty, credit constraints and resource management faced by poor rural households. We assume that, due to the existence of asymmetric information and moral hazard, the household faces an increasing cost of credit as its debt/equity ratio rises. A household exploiting a natural resource may fall into a poverty trap, but only if it is unable to afford the increasing borrowing costs implied by increasing debt to allow it to avoid such a trap, or if it discounts future utility so much that a balanced growth path cannot be financed at any level of long-run borrowing. In contrast, along an optimal balanced growth path, the household’s asset wealth, purchased inputs, resource stock and consumption increase at the same constant rate. However, over the long run there may be carrying capacity limits that prevent the resource from improving further. The household may then direct its savings to accumulating financial assets, and eventually under certain conditions may become a net creditor with resource exploitation becoming a less and less important source of its income." @default.
- W2110306532 created "2016-06-24" @default.
- W2110306532 creator A5010263632 @default.
- W2110306532 creator A5031224496 @default.
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- W2110306532 date "2015-02-26" @default.
- W2110306532 modified "2023-09-25" @default.
- W2110306532 title "Debt, Poverty and Resource Management in a Rural Smallholder Economy" @default.
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- W2110306532 doi "https://doi.org/10.1007/s10640-015-9890-4" @default.
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