Farm Product Prices, Redistribution, and the Early U.S. Great Depression
42 Pages Posted: 9 Nov 2020 Last revised: 27 Feb 2021
Date Written: November 2020
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.
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Joshua Hausman (Contact Author)
University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy ( email )
735 South State Street, Weill Hall
Ann Arbor, MI 48109
United States
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Farm Product Prices, Redistribution, and the Early U.S. Great Depression
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