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General Equilibrium Effects of Cash Transfers: Experimental Evidence from Kenya

Dennis Egger, Johannes Haushofer (), Edward Miguel (), Paul Niehaus and Michael Walker

No 26600, NBER Working Papers from National Bureau of Economic Research, Inc

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 non-recipient 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.

JEL-codes: E62 H3 O12 O23 R13 (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-exp and nep-mac
Note: DEV ME PE
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