Can cash transfers promote the local economy? A case study for Cambodia

Abstract

While previous research on cash transfer programs has primarily concentrated on micro-economic effects, this paper analyzes general equilibrium effects of social transfer policies using a computable general equilibrium model applied to Cambodia. It identifies the potential impact of these transfers on the local economy, looking particularly at prices and market responses to an increase in demand through production and trade. Our findings show that, for goods and services for which domestic supply is not elastic enough to respond to a significant rise in demand, prices will increase, affecting the value of transfers on poverty reduction.