Existing texts in economic development do not explain why micro credit loans often carry very high interest rates. Since many students are likely to perceive high interest rates on loans to the very poor as unfair or exploitative, I develop a simple model of a lending firm in which the necessity...

For discrete price changes, compensated cross-price effects for two goods need not be equal if the household consumes three or more goods. In this paper I ask whether compensated cross-price effects must have the same sign even if they differ in magnitude. I show that with three or more goods,...