NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Follow the Money: Methods for Identifying Consumption and Investment Responses to a Liquidity Shock

Dean Karlan, Adam Osman, Jonathan Zinman

NBER Working Paper No. 19696
Issued in December 2013
NBER Program(s):   DEV   LE   LS

Identifying the impacts of liquidity shocks on spending decisions is difficult methodologically but important for theory, practice, and policy. Using seven different methods on microenterprise loan applicants, we find striking results. Borrowers report uses of loan proceeds strategically, and more generally their reporting depends on elicitation method. Borrowers also interpret loan use questions differently than the key counterfactual: spending that would not have occurred sans loan. We identify the counterfactual using random assignment of loan approvals and short-run follow-up elicitation of major household and business cash outflows, and estimate that about 100% of loan-financed spending is on business inventory.

You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

Information about Free Papers

You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.

E-mail:

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w19696

Users who downloaded this paper also downloaded these:
Schorfheide and Song w19712 Real-Time Forecasting with a Mixed-Frequency VAR
Bloom w19714 Fluctuations in Uncertainty
Zinman w19682 Consumer Credit: Too Much or Too Little (or Just Right)?
Janzen and Carter w19702 After the Drought: The Impact of Microinsurance on Consumption Smoothing and Asset Protection
Cosar and Fajgelbaum w19697 Internal Geography, International Trade, and Regional Specialization
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us