The Macroeconomic Effects of Cash Transfers: Evidence from Brazil

Leo Feler, Arthur Mendes (), Wataru Miyamoto, Thuy Lan Nguyen and Steven Pennings

No 2024-02, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: This paper provides new evidence on the macroeconomic impact of cash transfers in developing countries. Using a Bartik-style identification strategy, the paper documents that Brazil’s Bolsa Familia transfer program leads to a large and persistent increase in relative state-level GDP, formal employment, and informal employment. A state receiving 1% of GDP in extra transfers grows 2.2% faster in the first year, with R$100,000 of extra transfers generating five formal-equivalent jobs, half of which are informal. Consistent with a demand-side mechanism, the effects are concentrated in non-tradable sectors. However, an open-economy New Keynesian model only partially captures the high multipliers estimated.

Keywords: fiscal multipliers; cash transfers; Bartik instrument; Bolsa Familia; informality; relative multiplier; local multiplier; developing countries (search for similar items in EconPapers)
JEL-codes: E0 E26 E32 O54 (search for similar items in EconPapers)
Pages: 56
Date: 2023-12-15
New Economics Papers: this item is included in nep-dge and nep-iue
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedfwp:97580

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DOI: 10.24148/wp2024-02

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