Is the Magic Happening? A Systematic Literature Review of the Economic Multiplier of Cash Transfers

The multiplier effects of cash transfers are receiving renewed attention globally. The existence of multipliers — or the generation of additional dollars for every one dollar injected as cash transfers — illuminates new aspects of the impacts of social assistance and holds the potential to redefine how “fiscal sustainability” is generally interpreted. However, multipliers also attract questions: are multipliers real and tangible? How are multipliers estimated? What method might be more suitable than others in different contexts? What does the evidence reveal about those effects? This paper briefly summarizes emerging findings from existing literature on low- and middle-income countries, including a total of 23 studies. The paper discusses the main estimation methods, such as social accounting matrix and econometric techniques; presents results on multipliers across studies; and draws lessons for future research and practice.