Farm Product Prices, Redistribution, and the Early U.S. Great Depression

Joshua Hausman, Paul Rhode and Johannes Wieland

No 28055, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We argue that falling farm product prices, incomes, and spending may explain 10-30 percent of the 1930 U.S. output decline. Crop prices collapsed, reducing farmers' incomes. And across U.S. states and Ohio counties, auto sales fell most in crop-growing areas. The large spending response may be explained by farmers' indebtedness. Reasonable assumptions about the marginal propensity to spend of farmers relative to nonfarmers and the pass-through of farm prices to retail prices imply that the collapse of farm product prices in 1930 was a powerful propagation mechanism worsening the Depression.

JEL-codes: E32 E65 N12 N52 Q11 Q12 (search for similar items in EconPapers)
Date: 2020-11
New Economics Papers: this item is included in nep-agr, nep-his and nep-mac
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Published as Joshua K. Hausman & Paul W. Rhode & Johannes F. Wieland, 2021. "Farm Product Prices, Redistribution, and the Early U.S. Great Depression," The Journal of Economic History, vol 81(3), pages 649-687.

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Journal Article: Farm Product Prices, Redistribution, and the Early U.S. Great Depression (2021)
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