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Households as Corporate Firms
An Analysis of Household Finance Using Integrated Household Surveys and Corporate Financial Accounting

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Part of Econometric Society Monographs

  • Date Published: November 2009
  • availability: Available
  • format: Paperback
  • isbn: 9780521124164

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About the Authors
  • This investigation proposes a conceptual framework for measurement necessary for an analysis of household finance and economic development. The authors build on and, where appropriate, modify corporate financial accounts to create balance sheets, income statements, and statements of cash flows for households in developing countries, using an integrated household survey. The authors also illustrate how to apply the accounts to an analysis of household finance that includes productivity of household enterprises, capital structure, liquidity, financing, and portfolio management. The conceptualization of this analysis has important implications for measurement, questionnaire design, the modeling of household decisions, and the analysis of panel data.

    • First major household survey to treat the household as a corporate firm, not consumption/production unit
    • Authors have been building their model for many years, testing it in field and classroom
    • Long-awaited study in both development and financial economics
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    Reviews & endorsements

    'This is path-breaking work. This monograph lays out the data needed for high-quality empirical work and gives concrete examples of how it can be done. This work and methodology should and will become extremely influential.' Orazio Attanasio, University College London

    'The application of corporate accounting principles to household survey data is an important idea that not only imposes intellectual discipline on the study of household finance but also delivers new insights arising from the treatment of households as small businesses. In this monograph, Samphantharak and Townsend lay out the basic approach, tackle many detailed problems of implementation, and present intriguing empirical findings on rural Thai households' productivity and financing constraints. The authors blaze a trail that many others will follow.' John Y. Campbell, Harvard University

    'For more than 10 years, Robert Townsend and his associates have collected unique data from Thai households. One of the features that makes this data particularly valuable is Townsend's theory-driven data collection approach: no piece of information is collected without some clear understanding of what it means and why it is being collected. This book is an invaluable illustration of this approach: accounting theory is being marshaled to construct detailed financial statements for households, many of whom have a farm or a small business. Samphantharak and Townsend's evident respect for these households should be a model and an inspiration for all future researchers.' Esther Duflo, MIT

    'The measurement of household assets and liabilities along with the decisions on how much to consume and invest is notoriously hard, especially in developing countries where households typically engage in a myriad of livelihood activities. Using the longest and richest high-frequency panel data ever collected in a developing country, this book combines rigorous analysis with practical advice. A must-read for anyone interested in development economics or involved in the design of household surveys.' Xavier Giné, The World Bank

    'Forty years ago, the microeconomics of the family opened a wide door for social scientists. Households as Corporate Firms gives that door a much-needed shove further open. The analytical structures described here will allow economists to collect better data, ask sharper questions, and bring into focus important parts of the economic lives of billions of people.' Jonathan Morduch, New York University

    'A wealth of new insights is brought to thinking about the financial health of individuals and households. Ideas from financial economics are integrated with the economics of household behavior to develop a powerful framework for better understanding household decision-making and financial well-being. The framework also points to important ways to improve measurement in household surveys. A must-read for anyone interested in development.' Duncan Thomas, Duke University

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    Product details

    • Date Published: November 2009
    • format: Paperback
    • isbn: 9780521124164
    • length: 214 pages
    • dimensions: 229 x 153 x 13 mm
    • weight: 0.302kg
    • contains: 2 b/w illus. 25 tables
    • availability: Available
  • Table of Contents

    Part I. Households as Corporate Firms:
    1. Introduction
    2. Conceptual framework
    Part II. Household Financial Accounting:
    3. Household surveys
    4. Constructing household financial statements from a household survey
    Part III. Household Finance:
    5. Financial analysis
    6. An application: liquidity constraints, kinship networks, and the financing of household investment
    7. Discussion: measurement and modeling.

  • Instructors have used or reviewed this title for the following courses

    • Advanced Financial Economics
    • Development Microeconomics
  • Authors

    Krislert Samphantharak, University of California, San Diego
    Krislert Samphantharak is an Assistant Professor and the Charles Robins Faculty Scholar in the School of International Relations and Pacific Studies at the University of California, San Diego. He is also an affiliate at the Bureau for Research and Economic Analysis of Development (BREAD). He received his doctoral degree in economics from the University of Chicago. In addition to his research on household finance, other research interests include family business groups, unpredictable corruption and firm investment, firm's lobby spending and its effective tax rate, effect of sales tax on gasoline prices, and economic development of the economies in Southeast Asia.

    Robert M. Townsend, Massachusetts Institute of Technology
    Robert M. Townsend is the Elizabeth and James Killian Professor of Economics in the Department of Economics at the Massachusetts Institute of Technology. He previously was the Charles E. Merriam Distinguished Service Professor in the Department of Economics at the University of Chicago, where he remains a Research Professor. His contributions to economic theory include the revelation principle, costly state verification, optimal multiperiod contracts, decentralization with private information, money with spatially separated agents, financial structure and growth, and forecasting the forecasts of others. His contributions to econometrics include the study of risk and insurance in developing countries. His work on village India was awarded the Frisch Medal in 1998.

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