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

Dean Karlan, Adam Osman and Jonathan Zinman

Working Papers from Yale University, Department of Economics

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.

JEL-codes: D12 D22 D92 G21 O12 O16 (search for similar items in EconPapers)
Date: 2013-11
New Economics Papers: this item is included in nep-ger and nep-mfd
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Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Follow the Money: Methods for Identifying Consumption and Investment Responses to a Liquidity Shock (2013)
Working Paper: Follow the Money: Methods for Identifying Consumption and Investment Responses to a Liquidity Shock (2013)
Working Paper: Follow the Money: Methods for Identifying Consumption and Investment Responses to a Liquidity Shock (2013)
Working Paper: Follow the Money: Methods for Identifying Consumption and Investment Responses to a Liquidity Shock (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:yaleco:126

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