Yemen

Financing Agreement (Additional Financing for the Third Public Works Project) between the Republic of Yemen and the International Development Association (with schedules, appendix and International Development Association General Conditions for Credits and Grants, dated 1 July 2005, as amended through 15 October 2006). Washington, 1 July 2008

Development Credit Agreement (Fisheries Resource Management and Conservation Project) between the Republic of Yemen and the International Development Association (with schedules and General Conditions Applicable to Development Credit Agreements dated 1 January 1985, as amended through 1 May 2004). Washington, 7 March 2006

Financing Agreement (Additional Financing for the Rural Water Supply and Sanitation Project) between the Republic of Yemen and the International Development Association (with schedules, appendix and International Development Association General Conditions for Credits and Grants, dated 1 July 2005, as amended through 15 October 2006). Washington, 25 February 2008

The productive impacts of transfer programmes have received increased attention. However, little is known about such effects in emergency and crisis settings. Even less is known about whether transfer type – a food basket or a cash grant – influences the productive potential of such transfers. Theory suggests that, while cash transfers can relieve liquidity constraints associated with investments, subsidized food provision, by acting as a form of insurance, may prevent households from retreating to conservative income-generating strategies during volatile periods. Using a randomized field experiment in Yemen, we contrast the effects of transfer modality. The results demonstrate a modest productive impact of both modalities and suggest a role for both liquidity and price risk channels. Cash transfer recipients invested relatively more in activities with higher liquidity requirements (livestock), while food recipients incorporated higher-return crops into their agricultural portfolios.