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Brad DeLong's Grasping Reality 2019-04-12 22:44:11

Summary:
Marshall Burke, Lauren Falcao Bergquist, and Edward Miguel: Sell Low and Buy High: Arbitrage and Local Price Effects in Kenyan Markets: "Small-scale farmers are commonly observed to “sell low and buy high,” rather than the reverse. In a field experiment in Kenya... credit market imperfections.... Timely access to credit... increasing farm revenues and generating a return on investment of 29%.... In contrast to existing experimental work, the results indicate a setting in which microcredit can improve firm profitability, and suggest that GE effects can substantially shape microcredit’s effectiveness. In particular, failure to consider these GE effects could lead to underestimates of the social welfare benefits of microcredit interventions...

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Marshall Burke, Lauren Falcao Bergquist, and Edward Miguel: Sell Low and Buy High: Arbitrage and Local Price Effects in Kenyan Markets: "Small-scale farmers are commonly observed to “sell low and buy high,” rather than the reverse. In a field experiment in Kenya... credit market imperfections.... Timely access to credit... increasing farm revenues and generating a return on investment of 29%.... In contrast to existing experimental work, the results indicate a setting in which microcredit can improve firm profitability, and suggest that GE effects can substantially shape microcredit’s effectiveness. In particular, failure to consider these GE effects could lead to underestimates of the social welfare benefits of microcredit interventions...

Bradford DeLong
J. Bradford DeLong is Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research. He was Deputy Assistant US Treasury Secretary during the Clinton Administration, where he was heavily involved in budget and trade negotiations. His role in designing the bailout of Mexico during the 1994 peso crisis placed him at the forefront of Latin America’s transformation into a region of open economies, and cemented his stature as a leading voice in economic-policy debates.

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