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General Equilibrium Effects of Cash Transfers in Kenya

Financial Inclusion Kenya

Despite studies finding positive results on individual households, development economists have yet to answer how cash transfers affect the larger economy. This project seeks to address the spillover effects on household welfare for those who did not receive cash transfers themselves, but who live in or near areas where cash transfer programs exist. These effects may either be positive, such as if cash transfers were to stimulate growth of local businesses, or negative, such as if transfers caused local prices to skyrocket. Researchers address these questions by implementing a large-scale, two-level randomized controlled trial for the NGO GiveDirectly, which provides large cash transfers to rural households in Kenya. Results will employ datasets from over 7,800 households and be used to study how cash transfers affect household welfare, prices, enterprise creation and local public finance. Results forthcoming.

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DCO Quarterly Newsletter: October 2019


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