No abstract

This paper proposes a simple analytical model to examine conditions in which a government policy to improve imperfect credit markets is practiced through a democratic political process, and analyzes interactions between the politically implemented policy and economic development. Individuals who support the policy are those who can start new investments only after the implementation of it. High income inequality and the low level of capital make the policy hard to implement, which is likely to cause the economy to fall into a poverty trap.Keywords: financial development, economic development, income inequality, majority voting JEL classification: D72, G18, O11, O15, O16 * We are grateful to Akihisa Shibata, Kazuhiro Yuki, Kazuo Mino, and Kenn Ariga for their helpful comments and suggestions. All errors are our own.

No abstract

This paper presents a simple model to examine the implication of credit market imperfections when considering the massive variation of agricultural labor productivity across countries. The development of credit markets enables more agents to acquire skills to work in nonagricultural sectors. The expansion of the sectors decreases the labor supply to agriculture as well as increases the supply of modern intermediate inputs to agriculture. Agricultural producers accordingly substitute the relatively cheap intermediate inputs for labor to produce a given level of an agricultural good, and, thereby, output per worker in agriculture is improved. Poor countries with less-developed credit markets are, therefore, far less productive in agriculture than rich countries with well-developed credit markets.

This paper presents a simple model to investigate the relationship among initial income inequality, education and eco- nomic growth. Public expenditure on education is determined through majority voting. Although preferences of individuals are not single-peaked, the individual with the median income becomes the decisive voter. Our model predicts that high initial inequality has a negative impact on education expenditure and therefore retards economic growth