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Dean Karlan, Jonathan Zinman, Long-Run Price Elasticities of Demand for Credit: Evidence from a Countrywide Field Experiment in Mexico, The Review of Economic Studies, Volume 86, Issue 4, July 2019, Pages 1704–1746, https://doi.org/10.1093/restud/rdy046
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Abstract
We use randomized interest rates, offered across eighty geographically distinct regions for twenty-nine months by Mexico’s largest microlender, to sketch the adjustment from a price change to a new equilibrium. Demand is elastic, and more so over the longer run; e.g. the dollars-borrowed elasticity increases from