The effect of cash injections: Evidence from the 1980s farm debt crisis

Nittai K. Bergman, Rajkamal Iyer, Richard T. Thakor*

*Corresponding author for this work

Research output: Contribution to journalReview articlepeer-review

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.

Original languageEnglish
Pages (from-to)5092-5130
Number of pages39
JournalReview of Financial Studies
Volume33
Issue number11
DOIs
StatePublished - 2020

Funding

FundersFunder number
Pinhas Sapir Center for Development

    Fingerprint

    Dive into the research topics of 'The effect of cash injections: Evidence from the 1980s farm debt crisis'. Together they form a unique fingerprint.

    Cite this