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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
Note: DAE EFG ME
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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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