Econ 277B  Economic Development II: Development Microeconomics

Tridip Ray, Indian Statistical Institute, New Delhi

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Syllabus

Lecture Notes

Syllabus

General Readings

  1. Ray, Debraj (1998), Development Economics, Princeton University Press; Chapter 14.
     

  2. Bardhan, Pranab and Christopher Udry (1999), Development Microeconomics, Oxford University Press; Chapters 7 and 8.
     

  3. Freixas, Xavier and Jean-Charles Rochet (1997), Microeconomics of Banking, MIT Press.
     

  4. Banerjee, Abhijit (2003), "Contracting Constraints, Credit Markets, and Economic Development", in Advances in Economics and Econometrics: Theory and Applications, Eighth World Congress of the Econometric Society, vol. 3, edited by M. Dewatripoint, L. Hansen and S. Turnovsky, Cambridge University Press, 1-46.
     

  5. Conning, Jonathan and Christopher Udry (2007), "Rural Financial Markets in Developing Countries", in Handbook of Agricultural Economics, vol. 3, edited by R. E. Evenson, P. Pingali and T. P. Schultz, Elsevier, 2857-2908.
     

  6. Levine, Ross (2005), "Finance and Growth: Theory and Evidence", in Handbook of Economic Growth, vol. 1A, edited by P. Aghion and S. Durlauf, Elsevier, 865-934.

Salient Features of Credit Markets in Less Developed Countries

  1. Banerjee, Abhijit (2003); section 3.
     

  2. Conning, Jonathan and Christopher Udry (2007); section 2.

The Complete Markets Benchmark

  1. Bardhan, Pranab and Christopher Udry (1999), Development Microeconomics, Oxford University Press; Chapter 8.
     

  2. Conning, Jonathan and Christopher Udry (2007); sections 3.1 - 3.3.

Contracting Under Asymmetric Information and Imperfect Enforcement

  1. Ghosh, Parikshit, Dilip Mookherjee and Debraj Ray (2001), "Credit Rationing in Developing Countries: An Overview of the Theory", Chapter 11, Readings in the Theory of Economic Development, edited by Dilip Mookherjee and Debraj Ray, London: Blackwell.

Rural Financial Intermediaries

  1. Conning, Jonathan and Christopher Udry (2007); section 4.
     

  2. Hoff, Karla and Joseph E. Stiglitz (1997), "Moneylenders and Bankers: Price-increasing Subsidies in a Monopolistically Competitive Market", Journal of Development Economics, 52, 429-462.
     

  3. Kranton, Rachel E. and Anand V. Swamy (1999), "The Hazards of Piecemeal Reform: British Civil Courts and the Credit Market in Colonial India", Journal of Development Economics, 58, 1-24.
     

  4. Jain, Sanjay (1999), "Symbiosis vs. Crowding-out: The Interaction of Formal and Informal Credit Markets in Developing Countries", Journal of Development Economics, 59, 419-444.
     

  5. Gine, Xavier (2011), "Access to Capital in Rural Thailand: An Estimated Model of Formal vs. Informal Credit", Journal of Development Economics, 96, 16-29.

Micro Finance

  1. Morduch, Jonathan (1999), "The Microfinance Promise", Journal of Economic Literature, 37, 1569-1614.
     

  2. Besley, Timothy and Stephen Coate (1995), "Group Lending, Repayment Incentives and Social Collateral", Journal of Development Economics, 46, 1-18.
     

  3. Ghatak, Maitreesh and Timothy W. Guinnane (1999), "The Economics of Lending with Joint Liability: Theory and Practice", Journal of Development Economics, 60, 1-34.
     

  4. Ghatak, Maitreesh (2000), "Screening by the Company You Keep: Joint Liability Lending and the Peer Selection Effect", Economic Journal, 110, 601-631.
     

  5. Roy Chowdhury, Prabal (2007), "Group-lending with Sequential Financing, Contingent Renewal and Social Capital", Journal of Development Economics, 84, 487-506.

Social Networks and Informal Institutions

  1. Besley, Timothy, Stephen Coate and Glenn Loury (1993), "The Economics of Rotating Savings and Credit Associations", American Economic Review, 83, 792-810.
     
  2. Banerjee, Abhijit and Andrew Newman (1998), "Information, the Dual Economy, and Development", Review of Economic Studies, 65, 631-653.

Property Rights and Credit Market

  1. Besley, Timothy and Maitreesh Ghatak (2009), "Property Rights and Economic Development", in  Handbook of Development Economics, vol. V, edited by D. Rodrik and M. Rosenzweig, Elsevier, 2009.
     
  2.  Besley, Timothy, Konrad B. Burchardi and Maitreesh Ghatak (2012), "Incentives and the de Soto Effect", Quarterly Journal of Economics, 127, 237-282.

Credit Market Imperfections and Poverty Traps

  1. Galor, Oded and Joseph Zeira (1993), "Income Distribution and Macroeconomics", Review of Economic Studies, 60, 35-52.
     
  2. Banerjee, Abhijit and Andrew Newman (1993), "Occupational Choice and the Process of Development", Journal of Political Economy, 101, 274-298.
     
  3. Aghion, P. and P. Bolton (1997), "A Theory of Trickle-Down Growth and Development", Review of Economic Studies, 64, 151-172.
     
  4. Piketty, T. (1997), "The Dynamics of the Wealth Distribution and the Interest Rate with Credit Rationing", Review of Economic Studies, 64, 173-189.

Financial Structure in Formal Credit Markets

  1. Holmstrom, Bengt and Jean Tirole (1997), "Financial Intermediation, Loanable Funds, and the Real Sector", Quarterly Journal of Economics, 112, 663-691.
     
  2. Bolton, Patrick and Xavier Freixas (2000), "Equity, Bonds, and Bank Debt: Capital Structure and Financial Market Equilibrium under Asymmetric Information", Journal of Political Economy, 108, 324-351.

Interaction of Formal and Informal Credit Markets

  1. Tressel, Thierry (2003), "Dual Financial Systems and Inequalities in Economic Development", Journal of Economic Growth, 8, 223-257.
     
  2. Madestam, Andreas (2014), "Informal Finance: A Theory of Moneylenders", Journal of Development Economics, 107, 157-174.
     
  3. Mookherjee, Dilip and Alberto Motta (2016), "A Theory of Interactions between MFIs and Informal Lenders", Journal of Development Economics, 121, 191-200.
     
  4. Lilienfeld-Toal, Ulf von, Dilip Mookherjee and Sujata Visaria (2012), "The Distributive Impact of Reforms in Credit Enforcement: Evidence from Indian Debt Recovery Tribunals", Econometrica, 80, 497-558.
     
  5. Burgess, Robin and Rohini Pande (2005), "Do Rural Banks Matter? Evidence from the Indian Social Banking Experiment", American Economic Review, 95, 780-795.
     
  6. Cole, Shawn (2009), "Fixing Market Failures or Fixing Elections? Agricultural Credit in India", American Economic Journal: Applied Economics, 1, 219-250.

Financial Development and Economic Development: Theory

Producing Information and Allocating Capital

  1. Greenwood, Jeremy and Boyan Jovanovic (1990), "Financial Development, Growth, and the Distribution of Income", Journal of Political Economy, 98, 1076-1107.
     
  2. Morales, M. F. (2003), "Financial Intermediation in a Model of Growth through Creative Destruction", Macroeconomic Dynamics, 7, 363-393.

Monitoring Firms and Exerting Corporate Governance

  1. Aghion, P., M. Dewatripont and P. Rey (1999), "Competition, Financial Discipline and Growth", Review of Economic Studies, 66, 825-852.
     
  2. Bencivenga, V. R. and B. D. Smith (1993), "Some Consequences of Credit Rationing in an Endogenous Growth Model", Journal of Economic Dynamics and Control, 17, 97-122.

Risk Amelioration

  1. Acemoglu, Daron and Fabrizio Zilibotti (1997), "Was Prometheus Unbound by Chance? Risk, Diversification and Growth", Journal of Political Economy, 105(4), 709-751.
     
  2. Allen, F. and D. Gale (1997), "Financial Markets, Intermediaries and Intertemporal Smoothing", Journal of Political Economy, 105, 523-546.
     
  3. Levine, R. (1991), "Stock Markets, Growth and Tax Policy", Journal of Finance, 46, 1445-1465.

Pooling of Savings

  1. Sirri, E. R. and P. Tuffano (1995), "The Economics of Pooling", in The Global Financial System: A Functional Approach, edited by D. B. Crane et al., Harvard Business School Press, 81-128.

Easing Exchange

  1. Greenwood, Jeremy and Bruce Smith (1997), "Financial Markets in Development, and the Development of Financial Markets", Journal of Economic Dynamics and Control, 21, 145-181.

Financial Development and Economic Development: Evidence

  1. King, Robert G. and Ross Levine (1993), "Finance and Growth: Schumpeter Might be Right", Quarterly Journal of Economics, 108, 717-737.
     
  2. Levine, Ross and Sara Zervos (1998), "Stock Markets, Banks, and Economic Growth", American Economic Review, 88, 537-558.
     
  3. Rajan, Raghuram and Luigi Zingales (1998), "Financial Dependence and Growth", American Economic Review, 88, 559-586.
     
  4. Demirguc-Kunt, Asli and Vojislav Maksimovic (1998), "Law, Finance, and Firm Growth", Journal of Finance, 53, 2107-2137.

Last Updated on 30 January 2017.