Forthcoming – “General Equilibrium Effects of Cash Transfers,” from Paul Niehaus, Johannes Haushofer, Ted Miguel and Michael Walker, answering the question: What are the market impacts of an inflow of ~15% of local GDP?
I have to say I barely understand what’s going on in a “market” … my economic background is very individual- and household-focused.
But understanding the effect of an intervention on a community as a whole, not just on those treated, seems really important. Partially, this is why we look at and consider spillover effects – the effect of an intervention on the neighbors of the treated, who didn’t receive the program themselves.
General equilibrium or market effects investigate a level up from spillover effects and treatment effects – they look at the cumulative impact of the program to the way the economy operates.
I couldn’t explain how one studies a specific market, or what counts as being part of the market, in any clear terms, but I’m still excited for this upcoming paper on the market-level effects of cash transfers, a point that has been debated recently, after evidence of potential negative spillover effects came out.
