A Structural Evaluation of a Large-Scale Quasi-Experimental Microfinance Initiative

Joseph Kaboski and Robert M. Townsend. Econometrica 79(5):1357-1406

Kaboski and Townsend use a structural model to understand, predict, and evaluate the impact of an exogenous microcredit intervention program, the Thai Million Baht Village Fund. They model household decisions in the face of borrowing constraints, income uncertainty, and high-yield indivisible investment opportunities. After estimating parameters, the authors evaluate the model's ability to predict and interpret the impact of village fund intervention. LINK