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Identifying the Effects of Bank Failures from a Natural Experiment in Mississippi during the Great Depression

  • Nicolas L. Ziebarth
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    I examine the causal effect of bank failures during the Great Depression using the quasi-experimental setup of Richardson and Troost (2009). The experiment is based on Mississippi being divided into two Federal Reserve districts, which followed different policies for liquidity provision. This translated into variation in bank failures across the state. Employing a plant-level sample from the Census of Manufactures, I find that banking failures had a negative effect on revenue stemming from a fall in physical output. I find no effect on employment at the plant-level and a large decline at the county-level. (JEL E32, E44, G21, G33, N12, N22, N92)

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/mac.5.1.81
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    Article provided by American Economic Association in its journal American Economic Journal: Macroeconomics.

    Volume (Year): 5 (2013)
    Issue (Month): 1 (January)
    Pages: 81-101

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    Handle: RePEc:aea:aejmac:v:5:y:2013:i:1:p:81-101
    Note: DOI: 10.1257/mac.5.1.81
    Contact details of provider: Web page: https://www.aeaweb.org/aej-macro
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