GENERAL EQUILIBRIUM EFFECTS OF CASH TRANSFERS: EXPERIMENTAL EVIDENCE FROM KENYA

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. (longitudinal) data on household receipt of the transfer; household consumption expenditure patterns (representative for both recipient and non-recipient households); local enterprise production, employment and revenue; labor market conditions; as well as especially high-frequency (monthly) and spatially disaggregated market data on prices. we the results through the lens of a theoretical framework that highlights the links between the individual empirical results, the aggregate transfer multiplier, and welfare in this setting. earlier we first document after We not observe meaningful

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