The effect of cash injections: evidence from the 1980s farm debt crisis
File(s)Cashflow.pdf (414.34 KB)
Accepted version
Author(s)
Bergman, NK
Iyer, Rajkamal
Thakor, RT
Type
Journal Article
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 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.
Date Issued
2020-11-01
Date Acceptance
2019-11-18
Citation
The Review of Financial Studies, 2020, 33 (11), pp.5092-5130
ISSN
0893-9454
Publisher
Oxford University Press (OUP)
Start Page
5092
End Page
5130
Journal / Book Title
The Review of Financial Studies
Volume
33
Issue
11
Copyright Statement
© The Author(s) 2020. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com. This is a pre-copy-editing, author-produced version of an article accepted for publication in The Review of Financial Studies following peer review. The definitive publisher-authenticated version is available online at: https://academic.oup.com/rfs/advance-article/doi/10.1093/rfs/hhaa012/5730004
Identifier
https://academic.oup.com/rfs/article/33/11/5092/5730004
Subjects
1401 Economic Theory
1402 Applied Economics
1502 Banking, Finance and Investment
Finance
Publication Status
Published
Date Publish Online
2020-02-07