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

Joseph P. Kaboski | Zendy; Molly Lipscomb | Zendy; Virgiliu Midrigan | Zendy

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

Author(s) -

Joseph P. Kaboski,

Molly Lipscomb,

Virgiliu Midrigan

Publication year - 2014

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.104.5.171

Subject(s) - economics , asset (computer security) , investment (military) , consumption smoothing , cash , aggregate (composite) , order (exchange) , relevance (law) , developing country , monetary economics , finance , microeconomics , macroeconomics , economic growth , business cycle , computer science , materials science , computer security , composite material , politics , political science , law

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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