Work

General Equilibrium Effects of Cash Transfers: Experimental Evidence from Kenya

Year: 2019

Type: report

Abstract: How large economic stimuli generate individual and aggregate responses is a central question in economics, but has not been studied experimentally.We provided one-time cash transfers of about USD 1000 to over 10,500 poor households across 653 randomized villages in rural Kenya.The implied fiscal shock was over 15 percent of local GDP.We find large impacts on consumption and assets for recipients.Importantly, we document large positive spillovers on nonrecipient households and firms, and minimal price inflation.We estimate a local transfer multiplier of 2.4.We interpret welfare implications through the lens of a simple household optimization framework.

Source: National Bureau of Economic Research

DOI: 10.3386/w26600

Authors: Dennis Egger, Johannes Haushofer, Edward Miguel, Paul Niehaus, Michael Walker