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

Nittai K Bergman; Rajkamal Iyer; Richard T Thakor

doi:10.3386/w23546

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

Nittai K Bergman, Rajkamal Iyer, Richard T Thakor

Research output: Working paper

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 cash flow shocks on the real and financial sector. We show that such cash flow shocks have significant impact on 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.

Original language	English
Place of Publication	Cambridge, Mass
Number of pages	49
DOIs	https://doi.org/10.3386/w23546
State	Published - Jun 2017
Externally published	Yes

Publication series

Name	NBER working paper series
Publisher	National Bureau of Economic Research
No.	23546

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10.3386/w23546

Cite this

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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 cash flow shocks on the real and financial sector. We show that such cash flow shocks have significant impact on 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.",

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