Financial Accelerator at Work: Evidence from Corn Fields

Nittai K. Bergman, Rajkamal Iyer and Richard Thakor

No 21086, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper tests financial accelerator models. Using a novel dataset on agricultural production, we examine how exogenous productivity shocks arising from variation in temperature are propagated into the future. We find that past weather shocks have persistent effects on land values and productivity up to two years following the shock. Propagation and amplification of productivity shocks are both significantly larger during the farm debt crisis of the 1980s and amongst farms in lower income counties. Finally, we find higher investment in farm equipment and decreased borrowing following a positive weather shock.

JEL-codes: D24 E22 G31 Q14 (search for similar items in EconPapers)
Date: 2015-04
New Economics Papers: this item is included in nep-agr
Note: CF EFG PR
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Citations: View citations in EconPapers (3)

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