Development Economics ECON 4915 Lecture 5. Andreas Kotsadam Room 1038 [email protected] Outline. Seminar tomorrow. Continuation of empirical methods (RD). Recap and possible exam question on credit. Micro credit ( Banarjee and Duflo 2010).
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Randomization requires minimal assumptions.
Non-experimental methods require assumptions that must be carefully assessed.
These assumptions cannot be proven so they must be very well argued.
Internal and external validity
What about interactions with other policies? In particular the policy stipulating that 40 percent of the lending should go to ”priority sectors”.
Do we know why the reform had an effect?
What about the long term effects? (See Fulford 2011, “The effects of financial development in the short and long run”, Boston College Working Paper.)
Was it cost effective?
Karlanputs it well:
“But before we are swept away in the tide of good feeling, let’s get our bearings. While the sunshine stories of microcredit are new, debt is old. People have borrowed money for millennia and we usually think of debt as a burden not as a miracle to cure poverty. There must be something truly alchemical about microcredit to have turned the act of borrowing money into gold.”