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  3. American Economic Review
  4. May 2014
  5. The Aggregate Impact of Household Saving and Borrowing Constraints: Designing a Field Experiment in Uganda

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

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

  • Joseph P. Kaboski
  • Molly Lipscomb
  • Virgiliu Midrigan
American Economic Review
vol. 104, no. 5, May 2014
(pp. 171–76)
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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.

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

Additional Materials

JEL Classification

  • 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