Working Paper: NBER ID: w26600
Authors: Dennis Egger; Johannes Haushofer; Edward Miguel; Paul Niehaus; Michael W. Walker
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.
Keywords: cash transfers; economic stimulus; randomized controlled trial; Kenya; spillover effects
JEL Codes: E62; H3; O12; O23; R13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| cash transfers (F24) | consumption expenditures for recipient households (D12) |
| cash transfers (F24) | consumption gains for nonrecipient households (D19) |
| cash transfers (F24) | durable asset holdings for recipient households (D14) |
| cash transfers (F24) | enterprise revenues in treatment villages (O18) |
| cash transfers (F24) | local economic activity (R11) |
| cash transfers (F24) | price inflation (E31) |