General Equilibrium Effects of Cash Transfers: Experimental Evidence from Kenya
This study, forthcoming in Econometrica, provides evidence on how large economic stimuli generate individual and aggregate responses. A one-time cash transfer of USD 1000 was given to over 10,500 poor households across 653 randomized villages in rural western Kenya. The implied fiscal shock was over 15 percent of local GDP. Recipient households experienced significant consumption and expenditure gains, and importantly, the study finds large positive spillovers on non-recipient households and firms. Authors estimate a local transfer multiplier of 2.4.