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Macroeconomics of Microfinance

Author

Listed:
  • Yongseok Shin

    (Wash. U. in St. Louis)

  • Joseph P. Kaboski

    (U. of Notre Dame and NBER)

  • Francisco J. Buera

    (UCLA and NBER)

Abstract
This paper provides a quantitative evaluation of the aggregate and distributional impacts of economy-wide microfinance or other credit programs targeted toward small-scale entrepreneurs. In our analysis, we find that the redistributive impacts of microfinance are stronger in general-equilibrium, but the aggregate impacts are smaller. Making the typical microfinance program more widely available has a negligible impact on per-capita income, since an increase in aggregate total factor productivity(TFP) is offset by lower capital accumulation that stems from redistributing income from individuals with high saving rates to those with low saving rates. However, the welfare impact is uniformly positive except for those few that are extremely talented and/or wealthy.

Suggested Citation

  • Yongseok Shin & Joseph P. Kaboski & Francisco J. Buera, 2011. "Macroeconomics of Microfinance," 2011 Meeting Papers 545, Society for Economic Dynamics.
    • Handle: RePEc:red:sed011:545
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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