Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/154945
Authors: 
Barbier, Edward B.
López, Ramón
Year of Publication: 
1998
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 87.1998
Abstract: 
This paper explores the link between poverty and resource allocation, including the management of natural resources, by chronically indebted rural smallholders in developing countries. The paper proposes a formal intertemporal model of a credit constrained farm household that can invest in wealth accumulation to relieve its long run indebtedness or conserve resources. The household must decide on an optimal combination of investments in the two forms of capital, given their savings capacity, indebtedness and costs of obtaining credit. The evolution of the natural resource base is closely dependent on the investment strategy followed by the household. The model is also used to analyse how policy-related variables may affect the household's investment strategy and, consequently, resource management and household poverty: (i) Changes in output and input prices, and (ii) changes in the liquidity available in rural credit markets.
Subjects: 
Debt
Developing country
Intertemporal model
Poverty
Pricing policies
Resource management
Rural credit
Rural households
Smallholders
Wealth accumulation
JEL: 
Q0
Q2
O1
Document Type: 
Working Paper

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