American Economic Review: Vol. 104 No. 5 (May 2014)

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The Aggregate Impact of Household Saving and Borrowing Constraints: Designing a Field Experiment in Uganda

Article Citation

Kaboski, Joseph P., Molly Lipscomb, and Virgiliu Midrigan. 2014. "The Aggregate Impact of Household Saving and Borrowing Constraints: Designing a Field Experiment in Uganda." American Economic Review, 104(5): 171-76.

DOI: 10.1257/aer.104.5.171

Abstract

We develop a model of households with multiple needs (smoothing shocks, financing investment) and constraints (limited credit, self-control issues) in order to examine the nature of household's financing constraints in a developing country, and the impact of relaxing them. We show that increased access to credit has very different implications for the aggregate model economy depending on its form: asset-financed or cash. We then illustrate how a short-term increase in access to loans leads to very distinct behavior in the short run. The relevance of the model can be evaluated using a field experiment, which we are currently implementing in Uganda.

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Additional Materials

Online Appendix (399.20 KB) | Download Data Set (263.72 KB) | Author Disclosure Statement(s) (71.01 KB)

Authors

Kaboski, Joseph P. (U Notre Dame)
Lipscomb, Molly (U VA)
Midrigan, Virgiliu (NYU)

JEL Classifications

C93: Field Experiments
D14: Household Saving; Personal Finance
O12: Microeconomic Analyses of Economic Development
O16: Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance


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