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

Author

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  • Joseph P. Kaboski
  • Molly Lipscomb
  • Virgiliu Midrigan

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.

Suggested Citation

  • Joseph P. Kaboski & Molly Lipscomb & Virgiliu Midrigan, 2014. "The Aggregate Impact of Household Saving and Borrowing Constraints: Designing a Field Experiment in Uganda," American Economic Review, American Economic Association, vol. 104(5), pages 171-176, May.
    • Handle: RePEc:aea:aecrev:v:104:y:2014:i:5:p:171-76
    Note: DOI: 10.1257/aer.104.5.171
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    Citations

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    Cited by:

    1. Raül Santaeulàlia-Llopis & Yu Zheng, 2018. "The Price of Growth: Consumption Insurance in China 1989–2009," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(4), pages 1-35, October.
    2. Francisco J. Buera & Joseph P. Kaboski & Yongseok Shin, 2015. "Entrepreneurship and Financial Frictions: A Macrodevelopment Perspective," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 409-436, August.
    3. Francisco J. Buera & Joseph P. Kaboski & Yongseok Shin, 2020. "Taking Stock of the Evidence on Microfinancial Interventions," Review, Federal Reserve Bank of St. Louis, vol. 102(2), pages 173-202, May.
    4. Ojah, Kalu & Kodongo, Odongo, 2024. "Effective financial inclusion and the need to put the horse before the cart: Saving!," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    5. Jarko Fidrmuc & Martin Siddiquiy, 2015. "Institutions and Creative Destruction in CEECs: Determinants of Inefficient Use of Assets," Working Papers 353, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).

    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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