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Microenterprise and returns to capital (25 points total.) Several randomized experiments (or pseudo-experiments) have found persistently high returns to capital in microenterprise. (High means much,
Microenterprise and returns to capital (25 points total.) Several randomized experiments (or pseudo-experiments) have found persistently high returns to capital in microenterprise. ("High" means much, much higher than a reasonable person's temporal discount (interest) rate.) Relate this to the model of capital investment with a borrowing constraint. (The two-period model that we saw in class.) Please use graphs to illustrate your reasoning, as appropriate. Discuss puzzles that emerge in this comparison, if any
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