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Follow the Money: Methods for Identifying Consumption and Investment Responses to a Liquidity Shock

Dean Karlan (), Adam Osman and Jonathan Zinman ()

No 160523, Center Discussion Papers from Yale University, Economic Growth Center

Abstract: Identifying the impacts of liquidity shocks on spending decisions is difficult methodologically but important for theory, practice, and policy. Using seven different methods on microenterprise loan applicants, we find striking results. Borrowers report uses of loan proceeds strategically, and more generally their reporting depends on elicitation method. Borrowers also interpret loan use questions differently than the key counterfactual: spending that would not have occurred sans loan. We identify the counterfactual using random assignment of loan approvals and short-run follow-up elicitation of major household and business cash outflows, and estimate that about 100% of loan-financed spending is on business inventory.

Keywords: Community/Rural/Urban Development; Consumer/Household Economics; International Development; Labor and Human Capital (search for similar items in EconPapers)
Pages: 24
Date: 2013-11
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https://ageconsearch.umn.edu/record/160523/files/cdp1034.pdf (application/pdf)

Related works:
Working Paper: Follow the Money: Methods for Identifying Consumption and Investment Responses to a Liquidity Shock (2013) Downloads
Working Paper: Follow the Money: Methods for Identifying Consumption and Investment Responses to a Liquidity Stock (2013) Downloads
Working Paper: Follow the Money: Methods for Identifying Consumption and Investment Responses to a Liquidity Shock (2013) Downloads
Working Paper: Follow the Money: Methods for Identifying Consumption and Investment Responses to a Liquidity Shock (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ags:yaleeg:160523

DOI: 10.22004/ag.econ.160523

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