The Effect of Cash Injections: Evidence from the 1980s Farm Debt Crisis

Nittai K Bergman, Rajkamal Iyer, Richard Thakor and Philip Strahan

The Review of Financial Studies, 2020, vol. 33, issue 11, 5092-5130

Abstract: What is the effect of cash injections during financial crises? Exploiting county-level variation arising from random weather shocks during the 1980s Farm Debt Crisis, we analyze and measure the effect of local weather-driven cash flow shocks on the real and financial sectors. We show that such cash flow shocks significantly affect a host of economic outcomes, including land values, loan delinquency rates, the probability of bank failure, employment, and wages. Estimates of the effect of local cash flow shocks on county income levels during the financial crisis yield a multiplier of 1.63.

JEL-codes: D24 E23 E24 E51 G01 G21 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (9)

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Working Paper: The Effect of Cash Injections: Evidence from the 1980s Farm Debt Crisis (2017)
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