One problem with giving aid to small villages


Published 24.10.18

How do cash transfers impact prices? Evidence from rural Mexico

In combating poverty, governments often have to choose between cash transfers and in-kind transfers constituting of goods and services (e.g. food, public housing etc.). Seema Jayachandran looks at how these two types of transfers affect prices in the context of small, rural villages in Mexico. She finds that in richer villages, there was a negligible effect of cash transfers on prices, but in the poorer ones there was sizeable inflation.