Mobile money services have rapidly expanded across emerging and developing economies and enabled new ways through which households and firms can conduct payments, save and send remittances. We explore how mobile money use can impact economic outcomes in India using granular data on transactions from Paytm, one of the largest mobile money service provider in India with over 400 million users. We exploit the period around the demonetization policy, which prompted a surge in mobile money adoption, and analyze how mobile money affects traditional risk-sharing arrangements. Our main finding is that mobile money use increases the resilience to shocks by dampening the impact of rainfall shocks on nightlights-based economic activity and household consumption. We complement these findings by conducting a firm survey around a phased targeting intervention which incentivized firms to adopt the mobile payment technology. Our results suggest that firms adopting mobile payments improved their sales after six-months of use, compared to other firms. We also elicit firms’ subjective expectations on future sales and find mobile payment adoption to be associated with lower subjective uncertainty and greater sales optimism.
the negative effect of economic shocks, specifically rainfallshocks, can be mitigated by the use of mobile money, essentially testing for the regional risk-sharing benefits of mobile money. While the demonetization policy provided an economy-wide impact, suddenly increasing mobile money adoption, our specific research question makes additional use of the exogenous timing of region-specific rainfallshocks. As can be seen in the figure above, the period before the policy announcement was characterized with very low levels of adoption and use that allows us to
This paper examines the determinants of inflation in Chad using quarterly data from 1983:Q1 to 2009:Q3. The analysis is based on a single-equation model, completed by a structural vector auto regression model to capture inflation persistence. The results show that the main determinants of inflation in Chad are rainfall, foreign prices, exchange rate movements, and public spending. The effects of rainfall shocks and changes in foreign prices on inflation persist during six quarters. Changes in public spending and the nominal exchange rate affect inflation during three and four quarters, respectively.
-quarter lag, through its impact on agricultural production. Public spending has a significant impact on inflation (with a one-quarter lag) through demand pressures on nontradables. Changes in trading partner prices and exchange rate movements are passed through imports to domestic prices, one quarter later.
The SVAR model also points to rainfall, foreign prices, exchange rate, and public spending as the main determinants of inflation. It also shows some persistent effects. For instance, while the impact of rainfallshock on inflation is at its highest three quarters after
Co-movement (synchronicity) in inflation rates among a set of 13 emerging and developing countries in Asia is shown to be strongest for the food component, partly due to common rainfall shocks—a result which the paper terms the ‘monsoon effect.’ Economies with higher trade integration and co-movement in nominal effective exchange rates also experience greater food-inflation co-movement. By contrast, cross-country co-movement in core inflation is weak and the aforementioned determinants have little explanatory power, suggesting a prominent role for idiosyncratic domestic factors in driving core inflation. In the context of the growing literature on the globalization of inflation, these results suggest that common weather patterns are partly responsible for any role played by a so-called ‘global factor’ among inflation rates in emerging and developing economies, in Asia at least.