Econometrica Vol. 90 No. 6 2022

General Equilibrium Effects of Cash Transfers: Experimental Evidence From Kenya

Dennis Egger¹; Johannes Haushofer^2,3,4,5; Edward Miguel^1,3,6; Paul Niehaus^7,3,6; Michael Walker⁶

¹ Department of Economics, University of California, Berkeley · ² Department of Economics, Stockholm University · ³ NBER · ⁴ Busara Center for Behavioral Economics · ⁵ Max Planck Institute for Collective Goods · ⁶ CEGA, University of California, Berkeley · ⁷ Department of Economics, University of California, San Diego

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 2.5. We interpret welfare implications through the lens of a simple household optimization framework.

DOI

10.3982/ecta17945

Volume

90

Issue

6

Pages

2603-2643

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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