The housing slump and the great depression in the USA
AbstractThe collapse of residential construction was a notable feature of the Great Depression in the USA. The housing slump did not simply follow the downward shifts in income: rather residential investment collapse helped to precipitate the Great Depression. By utilizing an augmented Tobin’s q model of residential investment, we show that heightened uncertainty surrounding builders’ anticipated profits largely explains the housing slump in the key year of 1930. A combination of forces, including house prices, building costs, credit and demand constraints, and financing costs, is shown to explain the longer decline of residential investment in 1928–1933. Tighter monetary policy played an important role in 1928–1929, whereas financial disintermediation was influential in 1933–1934.
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Bibliographic InfoArticle provided by Association Française de Cliométrie (AFC) in its journal Cliometrica, Journal of Historical Economics and Econometric History.
Volume (Year): 7 (2013)
Issue (Month): 1 (January)
Housing; Great depression; Tobin’s q; Uncertainty;
Find related papers by JEL classification:
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- G01 - Financial Economics - - General - - - Financial Crises
- N22 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: 1913-
- R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
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- Riccardo De Bonis & Andrea Silvestrini, 2013. "The Italian financial cycle: 1861-2011," Temi di discussione (Economic working papers) 936, Bank of Italy, Economic Research and International Relations Area.
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